SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 11, 1996
W. R. GRACE & CO.
(Exact name of registrant as specified in its charter)
New York 1-3720 13-3461988
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
One Town Center Road, Boca Raton, Florida 33486-1010
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 407/362-2000
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Item 5. Other Events.
On March 11, 1996, W. R. Grace & Co. ("Company") announced
that it had entered into a definitive agreement to sell its Dearborn water
treatment and process chemicals business to Betz Laboratories, Inc. ("Betz")
for $632 million. The transaction is expected to close in the second quarter
of 1996.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
The following are filed as exhibits to this Report:
- Press release issued by the Company on March 11, 1996.
- Grace Dearborn Worldwide Purchase and Sale Agreement, dated
as of March 11, 1996, between W. R. Grace & Co.-Conn., a
subsidiary of the Company, and Betz.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed by the undersigned
thereunto duly authorized.
W. R. GRACE & CO.
(Registrant)
By /s/Robert B. Lamm
Robert B. Lamm
Vice President and Secretary
Dated: March 27, 1996
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W. R. GRACE & CO.
Current Report on Form 8-K
Exhibit Index
Exhibit No. Description
99.1 Press Release issued by the Company on March 11, 1996
99.2 Grace Dearborn Worldwide Purchase and Sale Agreement,
dated as of March 11, 1996, between W. R. Grace & Co.-
Conn., a subsidiary of the Company, and Betz
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#2635
CONTACT: Chuck Suits or Mary Lou Kromer 407 362-2600 or
800 GRACE99
GRACE AGREES TO SELL DEARBORN
TO BETZ LABORATORIES FOR $632 MILLION
- WILL CREATE NEW $1.2 BILLION WATER TREATMENT COMPANY -
BOCA RATON, Fla., March 11, 1996 - - W. R. Grace & Co. today announced
that it has entered into a definitive agreement to sell its Dearborn water
treatment and process chemicals business to Betz Laboratories, Inc. (NYSE: BTL),
based in Trevose, Penn., for $632 million in cash. The transaction is expected
to close in the second quarter.
In commenting on the agreement, Grace's chairman, president and chief
executive officer, Albert J. Costello, said, "Today's agreement represents
significantly enhanced value for our shareholders. The proceeds from the
Dearborn sale, along with the $2.3 billion distribution from the National
Medical Care transaction slated to be completed in the third quarter, will be
applied to reduce debt and repurchase up to 20 percent of our common stock.
Additionally, we will invest in the further growth of our excellent businesses.
"Last September, Grace made a commitment to deliver maximum value to
its shareholders by considering all options regarding the Dearborn business.
Today, Grace management has delivered, on time, a transaction that gives our
shareholders full value for Dearborn's strong global market position and
outstanding
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organization. This transaction also will offer good career opportunities for
Dearborn employees, who will become part of a leading water management company
entirely focused on that industry," Costello concluded.
Since reorganizing as a global product line in 1992, Grace Dearborn,
under the leadership of its president, Ian Priestnell, has substantially
increased its global presence. "Once the transaction is completed, we will move
quickly to merge Dearborn's global operations with those of Betz Laboratories,
and we are committed to cooperating in a swift and smooth transition. I and
Dearborn's worldwide employees look forward to making our new organization an
even stronger market leader," Priestnell said.
"With the completion of this transaction, the new Betz-Dearborn
organization will become a $1.2 billion global company that is well positioned
to lead the changes in the rapidly evolving water management industry," added
Priestnell.
In addition to the Dearborn agreement announced today, the Grace
management team has recently implemented a number of steps to deliver
significant shareholder value:
- Reached an agreement with Fresenius AG for National Medical Care that
the analyst community has valued at approximately $4 billion.
- Implemented a cost cutting program that will reduce annual overhead by
$100 million, with further actions being taken to improve margins.
- Announced a major debt reduction and share repurchase program.
- Instituted more rigorous capital spending and working capital programs.
Dearborn provides water treatment products and services for industrial
boilers, cooling towers, process water systems and wastewater systems to help
customers meet demanding environmental regulations and industrial process
productivity and profitability
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goals. It also is a major supplier to the global pulp and paper industry and
other major industrial segments. In 1995, Dearborn had sales of approximately
$400 million with more than 2,500 employees worldwide.
Not included in the transaction is Dearborn's small South American
marine chemicals business which Grace is selling separately.
Merrill Lynch & Co. assisted Grace in this transaction.
Betz Laboratories, Inc., based in Trevose, Penn., is the world's
premier supplier of engineered programs and specialty chemical products for the
treatment of water, wastewater and process systems operating in a wide variety
of industrial and commercial applications.
Grace is a leading global supplier of flexible packaging and specialty
chemicals, and a leading provider of specialized health care services.
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GRACE DEARBORN
WORLDWIDE PURCHASE AND SALE AGREEMENT
AGREEMENT dated as of March 11, 1996 by and between W. R. GRACE & CO.-
CONN. ("Grace") and BETZ LABORATORIES, INC. ("Buyer").
W I T N E S S E T H :
WHEREAS, the Dearborn Business (as hereinafter defined) is conducted by
Grace and certain of its subsidiaries and affiliates (as identified on Exhibit
A-1 hereto) in more than fifty countries including Argentina, Australia,
Bahrain, Belgium, Bolivia, Brazil, Canada, Chile, Colombia, the Czech Republic,
Denmark, the Dominican Republic, Ecuador, El Salvador, Finland, France, Germany,
Greece, Guatemala, Hong Kong, Hungary, India, Indonesia, Ireland, Italy, Japan,
Kuwait, Malaysia, Mexico, the Netherlands, New Zealand, Norway, Panama,
Paraguay, Peru, the Philippines, Poland, Portugal, Russia, Saudi Arabia,
Singapore, South Africa, Spain, Sweden, Switzerland, Taiwan, Thailand, Trinidad,
Turkey, the United Arab Emirates, the United Kingdom, the United States, Uruguay
and Venezuela;
WHEREAS, Grace desires to sell the Dearborn Business to Buyer and Buyer
desires to purchase the Dearborn Business from Grace by means of the transfer
from Grace and its subsidiaries to Buyer and its subsidiaries of certain assets
and liabilities of the Dearborn Business including, but not limited to, the
partnership interests of the limited partnership conducting the Dearborn
Business in the United States, the capital stock of the Grace subsidiaries
conducting the Dearborn Business in Belgium, Canada, France, the Netherlands and
Sweden, and the capital stock owned by Grace in a joint venture company in
India; and
WHEREAS, in certain countries, the Dearborn Business is operated and
managed by Grace and its subsidiaries in combination with other Grace businesses
using shared facilities and the services of shared employees, and in some cases
such facilities and employees will be retained by Grace and its subsidiaries and
services made available to
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Buyer and its subsidiaries for a transitional period, while in other cases such
facilities and employees will be transferred to Buyer and its subsidiaries and
services made available to Grace and its subsidiaries for a transitional period;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, including the Schedules and Exhibits
hereto, the defined terms set forth in this Article and in Exhibits A-1, A-2 and
B shall have the meanings set forth in this Article or in such Exhibits. All
Article and Section numbers and Schedule and Exhibit references used in this
Agreement refer to Articles and Sections of this Agreement and Schedules and
Exhibits attached hereto or delivered simultaneously herewith, unless otherwise
specifically described.
"Ancillary Agreements" means the agreements described
in Section 3.4. "Ancillary Agreement" means one of the
Ancillary Agreements.
"Business Day" means a day that is not a Saturday or Sunday, nor a day
on which banks are generally closed in New York City nor, with respect to the
determination of the LIBOR Rate, a day on which banks are generally closed in
London, England.
"Buyer" means Betz Laboratories, Inc., a Pennsylvania
corporation.
"Buyer Group" means, collectively, Buyer and its Subsidiaries and, at
any time after the Closing, the Transferred Companies and Transferred Joint
Ventures.
"Buyer Indemnified Group" has the meaning given such
term in Section 14.2.
"Buyer Plans" means the employee benefit plans or
arrangements maintained by the Buyer Group. "Buyer Plan"
means one of the Buyer Plans.
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"Buying Companies" means, collectively, Buyer and each of the
Subsidiaries of Buyer listed in Exhibit A-2 and each of the Subsidiaries of
Buyer to which Buyer transfers the right to purchase any portion of the Total
Dearborn Assets, Transferred Shares, Transferred Interests or Transferred
Investments pursuant to Section 19.5. "Buying Company" means one of the Buying
Companies.
"CERCLA" means the Comprehensive Environmental Re-
sponse, Compensation, and Liability Act, 42 U.S.C. ss.9601 et
seq.
"Chromium Claims" means all Cleanup claims, statutory and common law
tort claims, product liability claims, and Natural Resource Damage Claims
relating to chromium compounds and salts thereof generated, stored, used,
disposed of, treated, handled, shipped or sold by the Dearborn Business or any
predecessor thereof on or before the Closing Date, including such chromium
compounds and salts thereof that are emitted, released, transported from or
disposed of at or from a Customer Site.
"Claimant" has the meaning given such term in Section
14.5(a).
"Cleanup" means those actions required to: (i) clean up, remove, treat
or remediate Hazardous Substances in the outdoor environment; (ii) prevent the
release of Hazardous Substances so that they do not migrate, endanger or
threaten to endanger public health or the outdoor environment; (iii) perform
pre-remedial studies and investigations and post-remedial monitoring and care;
or (iv) respond to any requests by any Governmental Authority for information or
documents in any way related to cleanup, removal, treatment or remediation of
Hazardous Substances in the outdoor environment.
"Closing" means the actions described in Sections 3.3 through 3.6 to be
taken by the Buying Companies and the Selling Companies and certain of their
affiliates.
"Closing Assumption Agreements" means the assumption agreements to be
executed and delivered by the Buying Companies at the Closing.
"Closing Conveyance Documents" means the deeds, bills
of sale, assignments and other instruments of conveyance to
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be executed and delivered by the Selling Companies at the
Closing.
"Closing Date" means the date on which the Closing
occurs.
"Closing Statement" has the meaning given such term in
Section 4.4.
"Closing Working Capital Assets", "Closing Working Capital
Liabilities" and "Closing Net Amount" have the respective meanings
given such terms in Section 4.2.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Confidentiality Agreement" has the meaning given such
term in Section 8.1.
"Continued Dearborn Business Employees" means the Continued
Employees and the employees of the Transferred Companies and Transferred
Joint Ventures. "Continued Dearborn Business Employee" means one of
the Continued Dearborn Business Employees.
"Continued Employees" has the meaning specified in Section 12.2(b).
"Continued Employee" means one of the Continued Employees.
"Current Employees" has the meaning specified in Section 12.2(a).
"Current Employee" means one of the Current Employees.
"Damages" has the meaning given such term in Section 14.1.
"Dearborn Belgium Shares" means all of the shares of capital stock of
the Dearborn Belgium Subsidiaries directly owned by Grace Belgium.
"Dearborn Belgium Subsidiaries" means: (a) Grace Dearborn N.V., a
Belgian corporation in which Grace Belgium owns 98.97% of the capital stock and
Alexim N.V. owns 1.03% of the capital stock; (b) Alexim N.V., a Belgian
corporation in which Grace Belgium owns 94.5% of the capital stock and Grace
Dearborn N.V. owns 5.5% of the capital stock; and (c) Finac N.V., a Belgian
corporation in which Alexim N.V.
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owns 88% of the capital stock and Grace Dearborn N.V. owns
12% of the capital stock.
"Dearborn Business" means the business conducted by the Selling
Companies, the Transferred Companies and the Transferred Joint Ventures of
providing (a) water treatment chemicals, support equipment and consulting
services to prevent corrosion, scale and microbiological growth in industrial
utility waters, heating, cooling and steam generation applications, and
industrial wastewater applications for clarification, sludge de-watering, odor
control and water recycling; (b) process chemicals, support equipment and
related consulting services to optimize and protect processing systems for the
production of pulp and paper, refined petroleum products and petrochemicals,
sugar and alcohol; (c) chemicals for the protection and cleaning of industrial
cooking and sterilizing equipment for canned food; (d) paint detackification
products and services to remove paint sludge from water wash paint spray
systems; (e) chemicals, equipment and consulting services for the treatment of
process waters in the mining and processing of metal ores; and (f) the provision
of polynaphthalene sulfonate, polyacrylate and polymethacrylate dispersants and
consulting services for use in the petrochemical, oil recovery, and rubber
industries. The term "Dearborn Business" does not include the business conducted
by the Grace Group of providing products, equipment and consulting services
useful for the bioremediation of contaminated water, soils or process streams by
either the Daramend(R) or bioreactor technologies, the business conducted by the
Grace Group of providing chemicals and other products and consulting services
useful in servicing and maintaining vessels used in salt and fresh water, or the
business of providing polynaphthalene sulfonate, polyacrylate and
polymethacrylate superplasticizers for the construction industry.
"Dearborn Business Employees" means the Current Employees and
employees of the Transferred Companies and the Transferred Joint Ventures.
"Dearborn Business Employee" means one of the Dearborn Business Employees.
"Dearborn Canada" means Grace Dearborn, Inc., an Ontario corporation
and a wholly owned Subsidiary of Dearborn International.
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"Dearborn Canada Shares" means all of the issued and outstanding shares
of capital stock of Dearborn Canada.
"Dearborn Financial Statements" has the meaning speci-
fied in Section 5.6.
"Dearborn France" means Grace Service Chemicals S.A., a French
corporation and a wholly owned Subsidiary of Grace France.
"Dearborn France Shares" means all of the issued and outstanding shares
of capital stock of Dearborn France.
"Dearborn India JV" means Dearborn I.E.I. (India) Private Ltd., an
Indian corporation in which Grace holds a 51% equity interest.
"Dearborn India JV Shares" means the shares of capital stock of the
Dearborn India JV owned by Grace.
"Dearborn Japan JV" means Nippon Dearborn K. K., a Japanese
corporation in which Dearborn Netherlands owns a 50% equity interest.
"Dearborn Japan JV Shares" means the shares of capital stock of the
Dearborn Japan JV owned by Dearborn Netherlands.
"Dearborn Netherlands" means Grace Dearborn B.V., a Netherlands
corporation in which Grace Netherlands owns a 97.14% equity interest and
Dearborn International owns a 2.86% equity interest.
"Dearborn Netherlands Shares" means all of the issued and outstanding
shares of capital stock of Dearborn Netherlands.
"Dearborn Sweden" means Grace Dearborn AB, a Swedish corporation and a
wholly owned Subsidiary of Grace AB.
"Dearborn Sweden Shares" means all of the issued and outstanding shares
of capital stock of Dearborn Sweden.
"Dearborn U.S." means Dearborn USA, Limited Partnership, a Delaware
limited partnership in which Grace is the sole general partner and owns a 1%
partnership interest and
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LB Realty, a wholly owned Subsidiary of Grace, is the sole limited partner and
owns a 99% partnership interest.
"DOJ" means the United States Department of Justice.
"Employee Benefits Agreement" means the Ancillary Agreement referred
to in Section 3.4(a).
"Environmental Costs" means those costs relating to, or in connection
with, Environmental Law, Cleanup (including costs paid by Buyer to third parties
for such third party's Cleanup costs), consulting and technical costs, Damages,
restitution, and monitoring costs.
"Environmental Law" means any law, regulation, rule, ordinance, by-law,
or order of any Governmental Authority, as in effect from time to time, that
relates to or otherwise imposes liability, obligations, or standards with
respect to pollution, the protection of the environment or the protection of
human health, including, without limitation, any liability, obligations or
standards with respect to the investigation or remediation of releases of
Hazardous Substances into the environment.
"Executives" means the following executives of the Dearborn Business:
Ian Priestnell, President of Grace Dearborn & General Manager of Water Treatment
Services; Gregory S. McCoy, Vice President and Chief Financial Officer; John A.
Kelly, Vice President, Research & Development; Jan Chrillesen, Vice President &
General Manager, Paper Industry Services; John A. Stilwell, Vice President &
General Manager, Asia Pacific; Stephen F. Werbe, Vice President and General
Manager - Europe; Donald J. Crawford, Vice President & General Manager, North
America; Juan Carlos Staibano, Vice President & General Manager - Latin America;
Richard P. Clifford, Director - Global Manufacturing & Logistics; with respect
to environmental matters set forth in Sections 5.8, 5.14, 5.18 and 14.2A, Mark
Stoler, Chief Environmental, Health and Safety Counsel of WRG; and, with respect
to employee benefit matters set forth in Sections 5.8, 5.12, 5.13, 5.16 and 5.18
and Article 12, Jason G. Albert, Director, Global Benefits Planning.
"Expatriate Agreements" has the meaning specified in Section 12.10.
"Expatriate Agreement" means one of the Expatriate Agreements.
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"Expatriate Employees" has the meaning specified in
Section 12.10. "Expatriate Employee" means one of the
Expatriate Employees.
"Financial Exchange Rate" has the meaning specified in
Section 2.4(a).
"FTC" means the United States Federal Trade Commission.
"Governmental Authorities" means all entities exercising executive,
legislative, judicial, regulatory or administrative functions of government,
whether the scope of such functions are transnational, national, or limited to
certain states, provinces, municipalities or other political subdivisions,
including, but not limited to, agencies, departments, boards, commissions or
other instrumentalities of any country or any political subdivisions thereof in
which the Dearborn Business is being conducted by the Grace Group. "Governmental
Authority" means one of the Governmental Authorities.
"Grace" means W. R. Grace & Co.-Conn., a Connecticut
corporation and a wholly owned Subsidiary of WRG.
"Grace Brazil" means Grace Brasil S.A., a wholly owned Subsidiary of
Grace.
"Grace Group" means, collectively, WRG, its Subsidiaries and, at any
time prior to the Closing, the Transferred Companies and Transferred Joint
Ventures.
"Grace Indemnified Group" has the meaning given such
term in Section 14.3.
"Grace Severance Arrangement" has the meaning specified in
Section 12.6(a).
"Grace Sweden" means Grace AB, a Swedish corporation and a wholly owned
Subsidiary of Grace.
"Hazardous Substances" means (a) petroleum or petroleum products; (b)
hazardous substances, hazardous wastes, hazardous materials, radioactive
materials, contaminants, pollutants, or toxic substances as defined under or
regulated by Environmental Law; or (c) any other chemical, material or
substance, the presence or release of which in
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or into the environment is regulated by any Governmental
Authority.
"HSR Act" means the U.S. Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and
regulations thereunder.
"Insurance Procedures Agreement" means the Ancillary
Agreement referred to in Section 3.4(c).
"Intellectual Property Licenses" means all licenses of intellectual
property that: (a) are between one or more of the Selling Companies or the
Transferred Companies and any Person that is not a member of the Grace Group,
and (b) either by their terms are assignable or for which consent to assignment
to a member of the Buyer Group has been obtained.
"Intellectual Property Rights" means:
(A) all intellectual property which (i) is owned by the Grace Group;
(ii) is used directly and exclusively in the Dearborn Business or has been
developed or is under development for exclusive use in the Dearborn Business;
and (iii) is included in one of the following categories:
(1) all invention disclosures and Patents (re-
ferred to by Grace's internal reference num-
ber), the Trademarks, the United States and
foreign copyright registrations, renewals
and applications to register copyrights in-
cluding, but not limited to, such previously
recited items as are listed on Schedule
5.15(a) (hereinafter the "Scheduled Intel-
lectual Property");
(2) all inventions, formulae, processes, designs,
know-how, show-how, manufacturing know-how, trade
secrets, computer software and technical manuals and
documentation which are not included within
subparagraph (1) above;
(3) all unregistered: trade names, brandnames,
trademarks, service marks, certification
marks, trade dress, designs and logos, as-
sumed names and other indications of origin,
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including, but not limited to, the DEARBORN
name (excluding, however, the use of the
DEARBORN name in combination with the GRACE
name);
(4) all goodwill symbolized by or associated
with any item of subparagraph (3) above; and
(5) all unregistered copyrights; and
(B) license rights to all other intellectual property which is (i) used
in or necessary to the Dearborn Business or (ii) has been developed or is under
development for use in the Dearborn Business, including, but not limited to, all
Patents, inventions, formulae, processes, designs, know-how, show-how,
manufacturing know-how, trade secrets, computer software, and technical manuals
and documentation, and all other proprietary information that is shared by the
Dearborn Business and Grace's other businesses, and with respect to which
exclusive rights within the field of the Dearborn Business have been granted to
Dearborn U.S. by the Dearborn USA, Limited Partnership Intellectual Property
License and Assignment Agreement dated November 30, 1995 between Grace and
Dearborn U.S. and the First Amendment thereto and will be assigned to Buyer by
operation of the Grace Dearborn Intellectual Property License and Assignment
Agreement referred to in Section 3.4(f).
"Knowledge" means the actual knowledge of such indi-
viduals, after due inquiry.
"LIBOR Rate" means the rate per annum in effect on the
Closing Date for one month U.S. dollar deposits in the
London Interbank Market as published in The Wall Street
Journal.
"Liens" means liens, security interests, pledges, charges, voting
trusts or agreements or other encumbrances.
"Litigation Expenses" has the meaning given such term
in Section 14.1(c).
"Local Purchase Prices" has the meaning specified in
Section 2.3. "Local Purchase Price" means one of the Local
Purchase Prices.
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"Material Adverse Effect" means a material adverse effect on the (a)
business, assets or liabilities, employee relationships, supplier relationships,
customer relationships, financial condition or results of operations of the
Dearborn Business, in each case taken as a whole, (b) the ability of the Selling
Companies and the Transferred Companies to conduct the Dearborn Business in the
manner in which it is currently conducted, or (c) the ability of the Selling
Companies and the Transferred Companies to consummate the transactions
contemplated by the Transaction Documents without material delay or impairment.
"Material Contracts" has the meaning given such term
in Section 5.11. "Material Contract" means one of the
Material Contracts.
"Natural Resource Damage Claims" means all actions arising under
Environmental Law relating to natural resource damage or the restoration of
natural resources, which actions arise from or result from the release,
discharge, disposal, spill, storage or transportation of Hazardous Substances
generated, stored, used, disposed of, treated, handled, shipped or sold by the
Dearborn Business or any predecessor thereof on or before the Closing Date.
"NPL" has the meaning given such term in Section
5.14(a).
"Patents" means all United States and foreign patents, patent
applications, patent disclosures, including all reissues, divisions,
continuations, continuations-in-part, substitutions or extensions of any of the
foregoing.
"Payment Exchange Rate" has the meaning specified in
Section 2.4(b).
"Person" means any individual, partnership, firm, trust, association,
corporation, joint venture, unincorporated organization, other business entity
or Governmental Authority.
"Price Waterhouse" means Price Waterhouse LLP.
"Salaried Dearborn Business Employee" has the meaning given such term
in Section 12.6(a).
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"Scheduled Closing Date" has the meaning given such term in
Section 3.1.
"Seller Plans" means the employee benefit plans or arrangements
maintained by the Grace Group.
"Selling Companies" means, collectively, Grace and each of the
subsidiaries of Grace listed in Exhibit A-1. "Selling Company" means one
of the Selling Companies.
"Subsidiaries" means entities in which either Grace or Buyer,
respectively, own directly or indirectly 50% or more of the voting power
or other similar interests. "Subsidiary" means one of the Subsidiaries.
"Surviving Intercompany Accounts" means amounts payable or receivable
as of the Closing that are (a) included in Total Dearborn Assets, Total Dearborn
Liabilities or the assets or liabilities of one of the Transferred Companies,
and (b) are payable to or receivable from a unit of the Grace Group whether or
not a part of the Dearborn Business for (i) products and services supplied in
the ordinary course of the Dearborn Business or the business of such other Grace
unit, (ii) reimbursement of selling expenses relating to the sale of Dearborn
Business products, (iii) reimbursement of personnel costs for Dearborn Business
Employees, (iv) royalties or (v) reimbursement of Dearborn dedicated research
expenses. Surviving Intercompany Accounts do not include amounts due to or from
any member of the Grace Group (other than a unit of the Dearborn Business) for
management or administrative services or other internal Grace Group allocations.
"Swedish Holding Company" means Dearborn Holdings AB, a Swedish
corporation and a wholly owned Subsidiary of Grace.
"Swedish Holding Company Shares" means all of the issued and
outstanding capital stock of the Swedish Holding Company.
"Tax" or "Taxes" means any United States federal, state, local or
foreign taxes including, but not limited to, taxes on or measured by income or
estimated income, alternative or add-on minimum tax, gross receipts, sales, use,
ad valorem, franchise, capital stock, transfer, gains, profit, license,
employees' withholding, foreign person
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withholding, backup withholding, social security, occupation, unemployment,
disability, excise, severance, stamp, premium, value added taxes, taxes on
services, real property, personal property, production, inventory and
merchandise, business privilege, or windfall profit tax, custom, duty or other
tax, governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest, penalty, addition to tax or additional amount
imposed by any Taxing Authority whether or not disputed.
"Tax Procedures Agreement" means the Tax Procedures Agreement referred
to in Section 3.4(b).
"Tax Return" means any return, report or other information required to
be filed with any Taxing Authority with respect to any Tax, including any
declaration of estimated tax or information return.
"Taxing Authority" means any Governmental Authority responsible for,
and having jurisdiction over, the assessment, determination, collection or other
imposition of Taxes.
"Total Dearborn Assets" has the meaning given such term in the
Definitions Schedule.
"Total Dearborn Liabilities" has the meaning given such term in the
Definitions Schedule.
"Total Excluded Assets" has the meaning given such term in the
Definitions Schedule.
"Total Excluded Liabilities" has the meaning given such term in
the Definitions Schedule.
"Total Purchase Price" has the meaning specified in Section 2.2.
"Toxic Tort Claims" means common law or statutory toxic tort actions
relating to loss of life or injury to persons or property, where such actions
arise or result from the actual or alleged release, discharge, disposal, spill,
storage, transportation, treatment or generation of Hazardous Substances,
including, but not limited to, the release, discharge, disposal, spill or
storage of Hazardous Substances contained in products supplied to customers of
the Dearborn Business or any predecessor thereof, provided
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that such Hazardous Substances were generated, stored, used, disposed of,
treated, released, handled, shipped or sold by the Dearborn Business or any
predecessor thereof on or before the Closing Date; except that Toxic Tort Claims
do not include Chromium Claims.
"Trademarks" means (i) all applications to register and registrations
of all tradenames, trademarks, service marks, logos and designs by any
Governmental Authority, including, without limitation, the United States Patent
and Trademark Office; (ii) all renewals of any of the preceding and (iii) all
goodwill symbolized thereby or associated therewith.
"Transaction Documents" means this Agreement, the Ancillary Agreements,
the Closing Assumption Agreements, the Closing Conveyance Documents and all
other documents executed at the Closing. "Transaction Document" means one of the
Transaction Documents.
"Transferred Companies" means the Dearborn Belgium Subsidiaries,
Dearborn Canada, Dearborn France, Dearborn Netherlands, the Swedish Holding
Company, Dearborn Sweden and Dearborn U.S. "Transferred Company" means one of
the Transferred Companies.
"Transferred Interests" means the 1% partnership interest in Dearborn
U.S. held by Grace and the 99% partnership interest in Dearborn U.S. held by LB
Realty.
"Transferred Investment" means the Dearborn India JV
Shares.
"Transferred Joint Ventures" means Dearborn India JV and Dearborn Japan
JV. "Transferred Joint Venture" means one of the Transferred Joint Ventures.
"Transferred Shares" means the Dearborn Belgium Shares, the Dearborn
Canada Shares, the Dearborn France Shares, the Dearborn Netherlands Shares and
the Swedish Holding Company Shares.
"Transitional Services Employees" means the employees of the Grace
Group who are designated at Grace's sole discretion, after Grace's good faith
consultation with Buyer, as employees available to provide substantial
transitional services to the Dearborn Business on and after the
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Closing Date, but who are not Dearborn Business Employees. "Transitional
Services Employee" means one of the Transitional Services Employees.
"Undisclosed Employee Liabilities" means all liabilities and
obligations to present or former employees of the Dearborn Business who are not
Continued Dearborn Business Employees or Transitional Services Employees who
become employees of the Buyer Group except for those (i) disclosed or reflected
in the 1995 Dearborn Statement of Net Assets, (ii) disclosed on any Schedule to
Articles 5 or 12 of this Agreement or (iii) disclosed on the Data Room Schedule.
"Undisclosed Product Liabilities" means all liabilities and obligations
arising from the sale or distribution of products by the Dearborn Business prior
to the Closing Date except for those (i) disclosed or reflected in the 1995
Dearborn Statement of Net Assets, (ii) disclosed on any Schedule to Article 5 of
this Agreement or (iii) disclosed on the Data Room Schedule.
"U.S. GAAP" means United States generally accepted accounting
principles.
"Valuation Date" means the Closing Date.
"WRG" means W. R. Grace & Co., a New York corporation, the parent
company of Grace.
ARTICLE 2
SALE OF DEARBORN BUSINESS, PURCHASE PRICE
2.1 Sale of Business. On the terms and subject to the conditions of
this Agreement, at the Closing, Grace shall sell and shall cause the other
Selling Companies to sell and Buyer shall purchase and shall cause the other
Buying Companies to purchase the Dearborn Business as follows: the Selling
Companies shall convey the Total Dearborn Assets owned by the Selling Companies,
the Transferred Shares, the Transferred Interests and the Transferred Investment
to the Buying Companies, and in exchange therefor, the Buying Companies shall
assume the Total Dearborn Liabilities of the Selling Companies and shall pay the
Local Purchase Prices (which in the aggregate shall equal the Total Purchase
Price).
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2.2 Total Purchase Price. "Total Purchase Price" means US $632 million,
plus or minus any adjustments under Sections 4.3, 4.A, 4.AA, 4.B and 4.C, and
subject to further adjustment as described in Section 2.5. The Total Purchase
Price shall be allocated among the Local Purchase Prices as provided in Section
2.3.
2.3 Local Purchase Prices. The "Local Purchase Price" for each country
in which a portion of the Dearborn Business is to be conveyed from one of the
Selling Companies to one of the Buying Companies, whether by the transfer of
assets, the transfer of capital stock or the transfer of partnership interests,
shall mean the portion of the Total Purchase Price allocated to the conveyance
in such country (which allocation shall be made in accordance with the agreed
upon fair market values of the portion of the Total Dearborn Assets and the
Dearborn Business located in each country), provided that the aggregate of the
Local Purchase Prices shall equal the Total Purchase Price. Grace and Buyer have
agreed to the Local Purchase Price for each such country as set forth in Exhibit
B (the "Allocation"). Prior to the Closing Date, Grace and Buyer shall, in good
faith, negotiate a specific allocation, in accordance with the Allocation, that
complies with the requirements of Section 1060 of the Code and any other
applicable provision of state, local or foreign Tax law (the "Specific
Allocation"). Each of the Grace Group and the Buyer Group shall, except for
allocations relating to expenses incurred in the transactions contemplated
herein which are included in the purchase price for Buyer, be bound by the
Allocation and the Specific Allocation for all Tax purposes including the
preparation and filing of Tax Returns. In the event that the Allocation or the
Specific Allocation is disputed by any Taxing Authority, the party receiving
notice of the dispute shall promptly notify the other party hereto concerning
the resolution of such dispute. Buyer and Grace each agrees to file Internal
Revenue Service Form 8594, and all federal, state, local and foreign Tax
Returns, using consistent allocations (except for allocations relating to
expenses incurred in the transactions contemplated herein which are included in
the purchase price for Buyer) in accordance with the Specific Allocation. Buyer
and Seller each agrees to provide the other promptly with any other information
required to complete Form 8594. Buyer and Grace may make material modifications
to the Allocation and the Specific Allocation only by mutual consent. If there
is an adjustment to the Total Purchase Price pursuant to
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this Agreement, Buyer and Grace shall modify the Allocation and the Specific
Allocation so that the adjustment is allocated to the country where it relates
or as Buyer and Grace otherwise mutually agree.
2.4 Exchange Rates.
(a) Except as otherwise provided in Section 2.4(b), wherever
the terms of this Agreement require that, for purposes of determining the amount
of any payment or the value of any asset or liability, an amount expressed in a
currency other than U.S. dollars be translated as of a specified date into U.S.
dollars, or that an amount expressed in U.S. dollars be translated as of a
specified date into the currency of another country, such amount shall be
translated using a rate to be mutually agreed upon by Grace and Buyer (the
"Financial Exchange Rate"). Translation of financial statements will be
determined in accordance with U.S. GAAP. Each Local Purchase Price described in
Exhibit B shall be expressed in U.S. dollars using the Financial Exchange Rate
for the applicable local currency for the Valuation Date, provided that the
aggregate of all Local Purchase Price shall equal the Total Purchase Price.
(b) The amounts to be paid in local currency in Brazil and
Colombia and any other countries pursuant to Sections 3.6 and 4.7 shall be
converted from U.S. dollars into local currency using a rate to be mutually
agreed upon by Grace and Buyer (the "Payment Exchange Rate").
2.5 Special Purchase Price Adjustment. If all of the conditions to the
obligations of the Buying Companies under this Agreement except for the
condition set forth in Section 10.3(b) have been fulfilled because one or more
of the Buying Companies is unable to complete the purchase of a portion of the
Dearborn Business in one or more countries because it does not obtain the
consent or approval of a Governmental Authority (including, without limitation,
the expiration of any waiting periods or any consent or approval contemplated by
Section 10.3(b)), Grace shall have the right to elect to have the Buying
Companies and the Selling Companies proceed with the Closing of the sale of the
Dearborn Business in all other countries by giving Buyer written notice of such
election, in the manner provided in Section 18.1, at any time prior to
termination of this Agreement pursuant to Section 13.1. If Grace so elects to
proceed with the Closing:
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(a) Notwithstanding the provisions of Section 3.1, the Closing
shall occur on the date specified by Grace in such written notice, which date
shall be no less than five Business Days following the date such notice is
delivered to Buyer; provided, however, that such date shall not be earlier than
the Scheduled Closing Date. At the Closing, the Selling Companies shall complete
the conveyances to the Buying Companies provided for in Section 3.3 except for
any conveyance that the parties are unable to complete as a result of the
failure to obtain such consent or approval (each such conveyance not completed
at the Closing is hereinafter referred to as a "Suspended Conveyance" and any
business that is subject to a Suspended Conveyance is hereinafter referred to as
a "Retained Business"). The existence of one or more Suspended Conveyances shall
not affect any of the actions of the parties to be taken at the Closing or their
respective obligations under this Agreement, except as otherwise specifically
provided in this Section.
(b) At the Closing, (i) each of the Buying Companies shall
make the purchase price payments due to the Selling Companies under Section 3.3
(in the manner provided in Section 3.6) except for payment due with respect to
any Suspended Conveyance, and (ii) Buyer shall pay to Grace the full amount of
the purchase price due to the Selling Companies under Section 3.3 for each
Suspended Conveyance. Buyer shall also be responsible for any post-Closing
adjustment payments attributable to such Suspended Conveyance pursuant to
Article 4.
(c) (i) Buyer and Grace will work together to agree upon the
manner in which a Retained Business should be operated from the Closing Date
until it is conveyed pursuant to paragraphs (d) or (e) hereof (the "Interim
Period"), in compliance with applicable law and in accordance with the following
principles: each Selling Company that has retained a Retained Business may
retain title to the Retained Business or may transfer the Retained Business to a
newly formed Subsidiary that is wholly owned directly or indirectly by Grace at
Grace's sole cost and expense. To the maximum extent permissible by applicable
law, Buyer shall operate the business thereof and make decisions in connection
therewith. In all other respects, Grace shall cause each Selling Company that
has a Retained Business (or each Subsidiary to which such Retained Business has
been transferred) to continue to operate such Retained Business
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in the geographic areas in which it was operated prior to the Closing in the
ordinary course of business, consistent with past practice. Such Selling Company
or Grace Subsidiary, as applicable, shall be deemed to have been granted
licenses by the Buyer Group to use all Intellectual Property Rights previously
used by such Selling Company in connection with the Retained Business and shall
pay royalties to Buyer (or a designated member of the Buyer Group) in exchange
for such licenses in the amount, if any, provided for in the agreements between
such Selling Company or Grace Subsidiary, as applicable, and other members of
the Grace Group in effect prior to the Closing. If such Suspended Conveyance
involves the retention by such Selling Company of the capital stock of a
Transferred Company or Transferred Joint Venture, such Transferred Company or
Transferred Joint Venture shall continue operating the Retained Business and
shall be granted such licenses and pay such royalties. If no agreement
previously existed between the Selling Company or Grace Subsidiary and other
members of the Grace Group providing for royalties, the license to continue
operating the Retained Business provided for herein shall be on a royalty free,
paid-up basis.
(ii) If Grace gives Buyer notice of its
election pursuant to this Section 2.5, at the Closing and at all times
thereafter, Buyer shall have the option in its sole discretion upon three days
written notice to Grace of having the Retained Business conveyed to it without
regard to whether or not the consent or approval of the relevant Governmental
Authority with respect to the Suspended Conveyance has been obtained. If Buyer
decides to exercise the option pursuant to this subsection (ii) such that the
business otherwise subject to the Suspended Conveyance shall be conveyed to
Buyer at the Closing, then the payment of the Local Purchase Price relating to
such business will be made as otherwise set forth in this Agreement and not as
contemplated by Section 2.5(b)(ii).
(d) Subject to Section 2.5(e), each Selling Company or Grace
Subsidiary, as applicable, that is operating a Retained Business shall proceed
as expeditiously as possible and use reasonable efforts to sell such Retained
Business to a purchaser that is not an affiliate of the Buyer Group or the Grace
Group (an "Independent Purchaser"); the manner of such sale (which may be by way
of "auction" or other competitive bidding process, negotiated sale or other
manner deemed appropriate) and the terms of
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any such sale shall be subject to the approval of Buyer, to the extent permitted
by applicable law, which approval shall not be unreasonably withheld or delayed.
Upon the closing of any such sale, Grace shall pay to Buyer, as an adjustment of
the Total Purchase Price, the proceeds of such sale, which amount shall be net
of expenses directly related to such sale (but shall not be reduced by any Taxes
incurred in connection with such sale, but the liability for transfer taxes
shall be allocated in accordance with Section 6(b) of the Tax Procedures
Agreement) which amount shall be adjusted to reflect Buyer's entitlement (on an
economic basis) to the earnings of the Retained Business during the Interim
Period and Grace's entitlement to reimbursement for the costs relating to
capital expenditures incurred with Buyer's consent, with interest on such net
amount.
(e) At Buyer's request, any Selling Company or Grace
Subsidiary, as applicable, operating a Retained Business shall delay all efforts
to achieve a sale to an Independent Purchaser for a period ending no later than
15 months after the Closing Date to permit the Buyer Group to obtain all
consents and approvals of Governmental Authorities required for the purchase by
the Buyer Group of the Retained Business. If the Buyer Group obtains all such
consents and approvals, such Selling Company or Grace Subsidiary, as applicable,
shall convey the Retained Business to a member of the Buyer Group designated by
Buyer. The purchase price for the assets and business so conveyed shall be
adjusted to reflect Buyer's and Grace's respective entitlement in accordance
with the provisions of the last sentence of Section 2.5(d).
(f) Buyer agrees to reimburse Grace for reasonable
out-of-pocket expenses related to the sale or attempted sale of a Retained
Business pursuant to Section 2.5(e) (other than Taxes incurred in connection
with such sale, but the liability for transfer taxes shall be allocated in
accordance with Section 6(b) of the Tax Procedures Agreement) to the extent not
deducted from the proceeds thereof in accordance with the terms of Section
2.5(d). No overhead or administrative cost charged by WRG, Grace or any member
of the Selling Group to a Retained Business will be reimbursed unless its
incurrence was approved in advance by Buyer.
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ARTICLE 3
CLOSING
3.1 Scheduled Closing Date. The "Scheduled Closing Date" shall be (a)
the latest of (i) Friday, June 7, 1996, (ii) the first Friday that is a Business
Day at least five Business Days following the fulfillment or waiver of the
conditions set forth in Sections 10.3 and 11.3 assuming the other conditions to
Articles 10 and 11 are satisfied at the Closing and (iii) if the Dearborn
Business suffers a Material Adverse Effect on or after the date hereof which
adversely affects Buyer's ability to obtain financing, the first Friday after
the date Buyer has available the necessary financing; provided, however, that
such date shall not be later than 30 days after the later to occur of clauses
(i) and (ii) hereof.
3.2 Time and Place of Closing, Simultaneity. The Closing shall take
place on the Scheduled Closing Date at 10:00 a.m. U. S. Eastern Time at the
offices of Grace, One Town Center Road, Boca Raton, Florida, U.S.A., and at such
other time and place as may be applicable under the laws of any other country or
as Grace and Buyer mutually agree. All of the actions to be taken and documents
to be executed and delivered at the Closing shall be deemed to be taken,
executed and delivered simultaneously, and no such action, execution or delivery
shall be effective until all actions to be taken and executions and deliveries
to be effected at the Closing are complete, except as otherwise specifically
provided for herein.
3.3 Conveyances at the Closing; Payments. At the Closing:
(a) the Selling Companies shall execute, ac-
knowledge and deliver to the Buying Compa-
nies special warranty deeds, notarial deeds,
bills of sale, endorsements, assignments and
other instruments of sale, conveyance,
transfer and assignment in order to effec-
tively transfer to the Buying Companies all
right, title and interest of the Selling
Companies in the Total Dearborn Assets, the
Transferred Shares, the Transferred Inter-
ests and the Transferred Investment;
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(b) the Buying Companies shall pay to the Sell-
ing Companies, on account of the Total Pur-
chase Price, an aggregate amount equal to US
$632 million, plus or minus the best joint
estimate by Grace and Buyer of the price
adjustment under Section 4.AA, and plus or
minus the price adjustments under Sections
4.A, 4.B and 4.C, except that (i) if the
parties have not reached agreement with re-
spect to a price adjustment under Section
4.A(c), then for the sole purpose of comput-
ing the payment under this Section, Buyer's
position with respect to such adjustment
shall be deemed to be correct and (ii) if
the parties have not reached agreement with
respect to a price adjustment under Section
4.B or 4.C in circumstances in which such
agreement is necessary, then for the sole
purpose of computing the payment under this
Section, there shall be deemed to be no ad-
justment; provided, however, nothing set
forth herein shall limit or otherwise affect
Buyer's right to indemnification under Sec-
tion 4.B or 4.C following the Closing; and
(c) the Buying Companies shall execute, acknowledge and
deliver to the Selling Companies assumption
agreements in order to effectively assume the Total
Dearborn Liabilities.
Each document of transfer or assumption referred to in this Article that is not
attached as an Exhibit hereto shall be in customary form for the country to
which it pertains, shall be reasonably satisfactory in form and substance to the
parties thereto, but shall contain no representations, warranties, covenants and
agreements other than those specifically contemplated by this Agreement. The
Buying Companies and the Selling Companies shall also execute and deliver such
other agreements, instruments and documents to effect, confirm or evidence the
transactions contemplated by this Agreement as any other party hereto shall
reasonably request. Buyer may request that, in lieu of instruments of
conveyance, a Selling Company convey specified assets by delivering possession
thereof, where they are then located, to the appropriate Buying Company.
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3.4 Ancillary Agreements. Each of the following agreements (the
"Ancillary Agreements"), other than the agreements referred to in subsection
(e), shall be executed and delivered by the parties thereto at the Closing or,
if such agreements are being executed and delivered simultaneously with this
Agreement, such agreements shall become effective at the Closing:
(Exhibits C and D Intentionally Omitted.)
(a) Employee Benefits Agreement among Grace, Buyer and
certain Subsidiaries of Grace and Buyer in the form
of Exhibit E.
(b) Tax Procedures Agreement between Grace and
Buyer concerning certain Tax matters, in the
form of Exhibit F.
(c) Insurance Procedures Agreement between WRG
and Buyer in the form of Exhibit G.
(d) Toll Manufacturing Agreements between the
Buying Companies and the Selling Companies
for production of Dearborn Business products
following the Closing by the Selling Compa-
nies at the production facilities owned by
the Selling Companies located at Quilmes,
Argentina; Fawkner, Australia; Bogota, Co-
lombia; Hong Kong; Toluca, Mexico; Porirua,
New Zealand; Canlubang, Philippines; Singa-
pore; Capetown, South Africa; Barcelona,
Spain; and Samutprakain, Thailand, the prin-
cipal terms of which are set forth on Exhib-
it H.
(e) Dearborn USA, Limited Partnership Intellec-
tual Property License and Assignment Agree-
ment executed on November 30, 1995 by and
between Grace and Dearborn U.S., and the
First Amendment thereto, providing for roy-
alty-free, exclusive licenses to Dearborn
U.S. within the field of the Dearborn Busi-
ness to the DARA-Trademarks, the Grace Dear-
born Trademark, and the Grafted Water Solu-
ble Intellectual Property Rights as those
terms are defined therein (Exhibit I).
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<PAGE>
(f) Grace Dearborn Intellectual Property License
and Assignment Agreement between Grace and
Buyer, providing for the assignment to Buyer
of (1) the agreement described in paragraph
(e) above and (2) rights to the DAREX Trade-
mark, and a royalty-free, exclusive license
to Buyer within the field of the Dearborn
Business to use intellectual property which
is shared by the Dearborn Business and
Grace's other businesses (Exhibit J).
(g) Transition Administrative Services Agreement between
Grace and Buyer, the principal terms of which are set
forth in Exhibit K.
(h) Swedish Toll Manufacturing Agreement between Dearborn
Sweden and Grace AB, the principal terms of which are
set forth in Exhibit H.
(Exhibit L Intentionally Omitted.)
(i) Lease Agreement for continued production at Grace
Construction Products plant located at Dearborn's
Widnes, England plant, the principal terms of which
are set forth on Exhib-
it M.
(j) Site separation agreements for Soracaba, Brazil and
Valencia, Venezuela, the principal terms of which are
set forth on Exhibit N-1 and N-2.
(k) Leasing arrangements for shared administrative and
sales offices and warehouses in Atlanta, Georgia,
Oslo, Norway, Helsinki, Finland, Santiago, Chile,
Helsingborg, Sweden and other locations, the
principal terms of which are set forth on Exhibit O-1
and O- 2.
3.5 Intentionally Omitted.
3.6 Method of Closing Payments. All payments at the
Closing by the Buying Companies to the Selling Companies
shall be made by means of a single payment by Buyer, for
itself and as agent for the other Buying Companies, to
Grace, for itself and as agent for the other Selling Compa-
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<PAGE>
nies, by means of a wire transfer to Grace's account #016- 001257 at Chemical
Bank, ABA #021-000-128, except as follows:
(a) the payment to be made by Buyer Brazil at
the Closing pursuant to Section 3.3 with
respect to the Brazilian Purchase Price
shall be paid to Holdings Brazil at the of-
fices of Tozzini, Freire, Teixeira e Silva,
Rua Libero Badaro, 293-20 Andar, Sao Paulo,
Brazil, in immediately available funds in
Brazilian Reals;
(b) the payment to be made by Buyer Colombia at
the Closing pursuant to Section 3.3 to Grace
Colombia with respect to the Colombian Pur-
chase Price-Grace Colombia and to Aquatec
Colombia with respect to the Colombian Pur-
chase Price-Aquatec Colombia shall be paid
at the offices of Camacho & Co., Calle 72
No. 5-83, 6o. Piso, Bogota, Colombia, in
Colombian Pesos;
(c) one or more payments to be made by Buyer or
a member of the Buyer Group in the event
that Buyer exercises its right to elect to
obtain local financing in a country listed
on the Local Financing Exhibit for the pur-
chase of equity of a Transferred Company or
assets relating to the Dearborn Business,
provided that Buyer shall indemnify and make
whole the Grace Group for any costs and ex-
penses incurred as a result of currency ex-
change rates and foreign currency transac-
tion fees directly attributable to this sub-
section (c); and
(d) at the option of Grace, by means of an installment
note having the terms set forth in the Schedule to
this Section and having such other terms as Grace and
Buyer shall mutually agree.
The amount of the payments to be made at the Closing in Brazil and Colombia and
pursuant to Section 3.6(c) shall be first determined in U.S. dollars and then
converted into
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local currency using the Payment Exchange Rate on the Business Day preceding the
Closing Date.
3.7 Further Assurances of the Selling Companies. At any time and
from time to time after the Closing, at the request of Buyer or any of the other
Buying Companies, with the expense thereof borne in accordance with Article 17,
the Selling Companies shall, and shall cause the other members of the Grace
Group to, execute and deliver, or cause to be executed and delivered, all such
deeds, assign- ments, and other documents, and take or cause to be taken all
such other actions, as Buyer or any of the other Buying Companies reasonably
deems necessary or desirable to put the Buying Companies in actual possession or
operating control of the Total Dearborn Assets and the Transferred Companies,
and of Grace's rights with respect to the Trans- ferred Investment, or to more
fully and effectively vest in the Buying Companies, or to confirm their title to
and possession of, the Total Dearborn Assets, the Transferred Shares, the
Transferred Interests and the Transferred Investment, including, without
limitation, all reasonable actions necessary to effectively transfer all of the
Selling Companies' interests in any of such assets as to which the consent of
any third party to the transfer thereof shall not have been obtained prior to
Closing.
3.8 Further Assurances of the Buying Companies. At any time and
from time to time after the Closing, at the request of Grace or any of the other
Selling Companies, with the expense thereof borne in accordance with Article 17,
the Buying Companies shall, and shall cause the other members of the Buyer Group
to, execute and deliver, or cause to be executed and delivered, all such
documents, and take or cause to be taken all such other actions, as Grace or any
of the other Selling Companies reasonably deems necessary or desirable to more
fully and effectively divest Grace and the other Selling Companies of
responsibility for the Total Dearborn Liabilities and incidents of ownership of
the Total Dearborn Assets, the Transferred Shares, the Transferred Interests and
the Transferred Investment, including, without limitation, all reasonable
actions necessary to effectively transfer all of the Selling Companies'
obligations with respect to any of such assets as to which the consent of any
third party to the transfer thereof shall not have been obtained prior to
Closing.
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3.8A Total Excluded Assets and Total Excluded Liabilities. On or prior
to the Closing Date, Grace shall (a) cause all rights, properties and other
assets of the Transferred Companies that are Total Excluded Assets to be sold,
assigned or otherwise conveyed by the Transferred Companies to Grace or Grace's
designees (which designees shall in no event include any of the Transferred
Companies), and Grace or such transferee shall assume all liabilities (absolute,
accrued, contingent or otherwise, known or unknown) and obligations related to
such Total Excluded Assets, and (b) assume or cause one of its designees (which
designees shall in no event include any of the Transferred Companies) to assume
all liabilities and obligations of the Transferred Companies that are Total
Excluded Liabilities. The sale, assignment or conveyance of such Total Excluded
Assets and the assumption of such Total Excluded Liabilities shall not create
any liabilities (absolute, accrued, contingent or otherwise, known or unknown)
or obligations of the Transferred Companies that shall survive the Closing;
provided, however, that to the extent Grace does not sell, assign, or convey the
Total Excluded Assets pursuant to clause (a) or assume the Total Excluded
Liabilities pursuant to clause (b) prior to the Closing Date, Grace shall
continue to sell, assign, convey or assume (or cause to be sold, assigned,
conveyed or assumed) the Total Excluded Assets or Total Excluded Liabilities
after the Closing Date and shall remain liable for such Total Excluded
Liabilities. Grace shall be solely responsible for the costs and expenses
associated with the transfer of such Total Excluded Assets and the assumption of
related liabilities and obligations. The costs and expenses relating to the
assumption of such Total Excluded Liabilities shall be paid in accordance with
Article 17.
ARTICLE 4
PURCHASE PRICES; POST-CLOSING ADJUSTMENTS
4.1 Physical Inventory Count; Closing of Books.
(a) The Selling Companies shall take a physical count of
Dearborn Business inventories of the Transferred Companies and the Selling
Companies at or within two weeks prior to the Valuation Date. Buyer and its
representatives shall have the opportunity to observe such inventory count. Such
inventory count shall be taken (1) in Brazil, the United States, Canada, the
United Kingdom, Germany, Sweden,
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<PAGE>
Belgium and the Netherlands, in accordance with the locations' inventory taking
procedures as incorporated in the Dearborn Business 1995 work papers of Price
Waterhouse (2) for other Dearborn Business locations as requested by Buyer, in
accordance with past practices or (3) as otherwise agreed to by Grace and Buyer.
(b) The Buying Companies and the Selling Companies or their
representatives shall cooperate to close the books of the Transferred Companies,
and, to the extent necessary for purposes of this Article, to close the
accounting records pertaining to the Dearborn Business of each of the Selling
Companies, as of 11:59 p.m. local time on the Valuation Date.
4.2 Definitions.
(a) "Closing Working Capital Assets" means the aggregate
amount, as of 11:59 p.m. local time on the Closing Date, of cash, accounts
receivable, inventories and other current assets that are included in the Total
Dearborn Assets.
(b) "Closing Working Capital Liabilities" means the aggregate
amount, as of 11:59 p.m. local time on the Closing Date, of accounts payable,
income taxes and other current liabilities that are included in the Total
Dearborn Liabilities. Other current liabilities will include an accrual for
vacation entitlement for 1996 determined on a pro rata basis for the year.
(c) "Closing Net Amount" means the amount of the Closing
Working Capital Assets less the amount of the Closing Working Capital
Liabilities.
(d) "1995 Dearborn Statement of Net Assets" means a special
purpose combined and consolidated statement of net assets of the Dearborn
Business, other than the Total Excluded Assets and the Total Excluded
Liabilities, as of the close of business on December 31, 1995, prepared in
conformity with U.S. GAAP, and accompanied by a report of Price Waterhouse
stating whether the 1995 Dearborn Statement of Net Assets has been prepared, in
all material respects, in accordance with the terms of this Agreement and with
U.S. GAAP.
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(e) "1995 Dearborn Statement of Pretax Income" means a special
purpose combined and consolidated statement of pretax income of the Dearborn
Business for the year ended December 31, 1995 (which includes a line item
Contribution Margin determined on the basis specified in the Schedule to this
Section), prepared on a basis recognizing that the Dearborn Business is not
stand-alone, which basis of presentation will be described in Note 1 thereto,
and in conformity with U.S. GAAP, and accompanied by a report of Price
Waterhouse, which will include a schedule of audit adjustments, stating whether
the 1995 Dearborn Statement of Pretax Income, in all material respects, presents
fairly the pretax results of operations of the Dearborn Business for 1995 on the
basis of presentation described in Note 1 and in conformity with U.S. GAAP.
(f) "1995 Working Capital Assets" means the aggregate amount,
as shown on the 1995 Dearborn Statement of Net Assets, of the cash, accounts
receivable, inventories and other current assets of the Dearborn Business.
(g) "1995 Working Capital Liabilities" means the aggregate
amount, as shown on the 1995 Dearborn Statement of Net Assets, of the accounts
payable, income taxes and other current liabilities of the Dearborn Business.
(h) "1995 Net Amount" means the 1995 Working Capital Assets
less the 1995 Working Capital Liabilities.
(i) "Contribution Margin" has the meaning given
such term in the Schedule to this Section.
(j) "1995 Contribution Margin Amount" means the aggregate
amount of the Contribution Margin of the Dearborn Business for 1995, as shown on
the 1995 Dearborn Statement of Pretax Income.
(k) "Non-Recurring Event" means any event that would not be
reasonably expected to have any significant effect on the Contribution Margin of
the Dearborn Business for 1996 or subsequent years.
(l) "Earnings Multiple" means 9.
4.3 Computations. The Closing Net Amount shall be
determined in U.S. dollars on a going concern basis, in
accordance with U.S. GAAP applied on a basis consistent
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with the accounting principles used in the preparation of the 1995 Dearborn
Statement of Net Assets, and using the same account classifications, closing
procedures and levels of materiality as those used in the preparation of the
1995 Dearborn Statement of Net Assets. If Buyer is able to establish that the
representation in Section 5.6 with respect to the 1995 Dearborn Statement of Net
Assets was inaccurate, then both the 1995 Dearborn Statement of Net Assets and
the Closing Net Amount shall be restated using the corrected accounting
principles and levels of materiality that would cause such representation to be
accurate, and the Total Purchase Price shall be adjusted accordingly. All
amounts deemed paid and discharged pursuant to Section 16.3 or retained or
assumed by any member of the Grace Group (or for which Grace has agreed to
indemnify the Buyer Group) as of the Closing Date in accordance with any of the
Ancillary Agreements, shall be excluded from the assets and liabilities to be
considered in the calculation of the Closing Net Amount.
4.4 Closing Statement. As soon as practicable after the Closing, but in
no event later than 120 calendar days after the Closing, Grace shall deliver to
Buyer a statement setting forth Grace's determination of the Closing Net Amount
(the "Closing Statement"), together with a report of Price Waterhouse stating
whether the Closing Net Amount shown on the Closing Statement has been
determined, in all material respects, in accordance with the terms of this
Agreement. Upon and after delivery to Buyer of the Closing Statement, Buyer's
independent accountants accompanied by Buyer shall, upon request, be given
access to Price Waterhouse's working papers to facilitate Buyer's review of the
Closing Statement.
4.A Pre-Closing Financial Statements Price Adjustments.
(a) 1995 audited statements. As promptly as practicable after
the date of this Agreement, but in no event later than April 10, 1996, Grace
shall deliver to Buyer the audited 1995 Dearborn Statement of Net Assets and
1995 Dearborn Statement of Pretax Income.
(b) Working capital adjustment. The Total
Purchase Price shall be increased by the amount, if any, by
which the 1995 Net Amount exceeds US $71.9 million or
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decreased by the amount, if any, by which the 1995 Net Amount is less than US
$71.9 million.
(c) Contribution Margin adjustment.
(i) Not later than 15 calendar days after
delivery of the 1995 Dearborn Statement of Pretax Income, Grace shall deliver a
statement to Buyer as to the amount, if any, of the price adjustment under this
subsection as computed by Grace, together with a schedule of all audit
adjustments made in the preparation of the 1995 Dearborn Statement of Pretax
Income, indicating which are due to Non-Recurring Events. Buyer and Grace agree
that the audit adjustments set forth on such schedule will be the only items
which the parties may dispute in connection with the calculation of the
Contribution Margin adjustment.
(ii) If the 1995 Contribution Margin Amount
exceeds US $70.5 million, there shall be no resulting price
adjustment.
(iii) If the 1995 Contribution Margin Amount
is less than US $70.5 million, the following shall apply:
(A) There shall be no resulting price
adjustment with respect to that portion of the shortfall in the 1995
Contribution Margin Amount which is attributable to Non-Recurring Events.
(B) That portion of the shortfall in
the 1995 Contribution Margin Amount which is attributable to Non-Recurring
Events shall be subtracted from the total shortfall, and US $625,000 shall be
deducted from the resulting amount.
(C) If the amount computed pursuant to
subsection (c)(iii)(B) of this Section is greater than zero, then such amount as
so computed shall be multiplied by the Earnings Multiple and the Total Purchase
Price shall be decreased by the resulting amount. Such resulting amount is the
"Contribution Margin Adjustment."
4.AA Post-Closing Financial Statement Price Adjustment. The Total
Purchase Price shall be increased by the amount of any increase, or decreased by
the amount of any decrease, in the amount of the Closing Net Amount from the
1995 Net Amount.
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4.5 Acceptance. If Buyer does not object to the Closing Net Amount
shown on the Closing Statement delivered by Grace, by written notice of
objection delivered to Grace within 60 calendar days after Buyer's receipt of
such statement, describing in reasonable detail each of its proposed adjustments
to Grace's determination thereof, then the Closing Net Amount shown on the
Closing Statement shall be final and binding on all parties to this Agreement.
If Buyer does not object to the amount of the Contribution Margin Adjustment
shown on the statement delivered by Grace under Section 4.A(c)(i), by written
notice of objection delivered to Grace within 60 calendar days after Buyer's
receipt of such statement, describing in reasonable detail each of Buyer's
proposed adjustments to the price reduction as computed by Grace, then the
Contribution Margin Adjustment as proposed by Grace shall be final and binding
on all parties to this Agreement.
4.6 Non-Acceptance, Resolution of Disputes.
(a) If Buyer objects to the Closing Net Amount shown on the
Closing Statement or the Contribution Margin Adjustment as shown on Grace's
statement under Section 4.A(c)(i) within the time period specified in Section
4.5, then Buyer and Grace shall promptly endeavor to agree upon the proper
amount of all items in dispute. If a written agreement resolving any disputed
item has not been reached within 45 calendar days after the date of receipt by
Grace of Buyer's notice of objection to the Closing Net Amount or the
Contribution Margin Adjustment, then either Grace or Buyer may, by notice to the
other refer their differences to a "Big Six" accounting firm to be agreed upon,
other than Price Waterhouse or Buyer's independent accountants (the "CPA Firm").
The CPA Firm, acting as experts and not as arbitrators, shall determine in
accordance with the terms of this Article the differences so submitted,
including the determination of what adjustments, if any, must be made in one or
more of the items reflected in the Closing Statement delivered by Grace pursuant
to Section 4.4 in order for the Closing Net Amount to be determined in
accordance with the provisions of this Agreement or in one or more components of
the Contribution Margin Adjustment as shown on the statement delivered by Grace
under Section 4.A(c)(i) in order for the Contribution Margin Adjustment to be
determined in accordance with the provisions of this Agreement. In any
determination by the CPA Firm of an adjustment to the Contribution Margin
Adjustment, Grace
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shall have the burden of proving the extent to which any shortfall was caused by
a Non-Recurring Event. The determination of the CPA Firm shall be determined in
accordance with the provisions of this Agreement and shall be final and binding
on all parties to this Agreement.
(b) The fees and expenses of the CPA Firm for any
determination under this Article shall be shared as follows: if the dispute
involves the Closing Net Amount, Grace shall bear a portion of such fees and
expenses equal to the total amount of such fees and expenses multiplied by a
fraction, the numerator of which shall be the difference between the Closing Net
Amount as determined by the CPA Firm and the Closing Net Amount as finally
proposed by Grace, and the denominator of which shall be the difference between
the Closing Net Amount as finally proposed by Buyer and the Closing Net Amount
as finally proposed by Grace; or, if the dispute involves the Contribution
Margin Adjustment, Grace shall bear a portion of such fees and expenses equal to
the total amount of such fees and expenses multiplied by a fraction, the
numerator of which shall be the difference between the Contribution Margin
Adjustment as determined by the CPA Firm and the Contribution Margin Adjustment
as finally proposed by Grace, and the denominator of which shall be the
difference between the Contribution Margin Adjustment as finally proposed by
Buyer and the Contribution Margin Adjustment as finally proposed by Grace. Buyer
shall bear the remainder of such fees and expenses.
(c) Nothing herein shall be construed to authorize or permit
the CPA Firm to (i) determine any question or matter whatsoever under or in
connection with this Agreement or any other Transaction Document except the
determination of what adjustments, if any, must be made in one or more of the
items reflected in the Closing Net Amount as shown on the Closing Statement
delivered by Grace in order for the Closing Net Amount to be determined in
accordance with the provisions of this Agreement, or in one or more components
of the Contribution Margin Adjustment as shown on the statement delivered by
Grace under Section 4.A(c)(i) in order for the Contribution Margin Amount to be
determined in accordance with the provisions of this Agreement, (ii) determine a
Closing Net Amount that is outside of the range between the Closing Net Amounts
as finally proposed by Grace and Buyer, respectively, or a Contribution Margin
Adjustment that is outside of the range between
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the Contribution Margin Adjustments as finally proposed by Grace and Buyer,
respectively, or (iii) to make any change to the dollar amounts specified in
Section 4.A, which amounts have been established by agreement of the parties and
may not be changed except in accordance with Section 19.6. Nothing herein shall
be construed to require the CPA Firm to follow any rules or procedures of any
arbitration association. Grace and Buyer each shall provide each other and the
CPA Firm full access to the books and records, any other information, including
work papers of its accountants, and to any of its employees to the extent
necessary for any determination under this Article.
4.B Pre-Closing Adjustment for Certain Additional
Liabilities.
(a) In the event of a Major Undisclosed Liability, as to which
Buyer notifies Grace prior to Closing, the Total Purchase Price shall be reduced
as provided in this Section.
(b) For purposes of this Section,
(i) An Undisclosed Liability means any
liability, determinable or contingent (other than a current liability), that was
not (1) reflected in the 1995 Dearborn Statement of Net Assets or (2) disclosed
as of the date hereof on any schedule to Articles 5 or 12 of this Agreement or
the Data Room Schedule as of the date hereof. Liabilities for pensions in
Germany or the Netherlands, or for employee severance indemnity or premium
payments in Brazil, Colombia, Venezuela, Italy or France, shall not in any event
be Undisclosed Liabilities, whether or not they are reflected in the 1995
Dearborn Statement of Net Assets or described in any schedule to this Agreement.
(ii) A Major Undisclosed Liability means an
Undisclosed Liability that either (a) should be reflected, as of the Closing, on
a balance sheet prepared in accordance with U.S. GAAP, or (b) is such that the
reasonable estimate, as of the Closing, of the actual amount of loss or payment
that will directly result from the Undisclosed Liability, is US $500,000 or
more, determined separately for each Undisclosed Liability.
(c) Except as provided in subsection (d) of this
Section, the amount of the price reduction for a Major
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Undisclosed Liability shall be, (1) if the Major Undisclosed Liability should be
reflected, as of the Closing, on a balance sheet prepared in accordance with
U.S. GAAP, the amount that should be so reflected, and (2) in all other cases,
an amount equal to the reasonable estimate, as of the Closing, of the actual
amount of loss or payment that will directly result from the Major Undisclosed
Liability.
(d) This Section shall not entitle the Buying Companies to any
price adjustment with respect to matters as to which the Buying Companies
otherwise are entitled to be indemnified by the Selling Companies under this
Agreement or any of the Ancillary Agreements.
4.C Adjustment for Certain Conveyancing Problems. In the event
that any asset, property or right transferred or to be transferred to the Buying
Companies under this Agree- ment, other than (i) items that would be reflected
on a balance sheet as current assets and (ii) rights under contracts or
arrangements for the sale of Dearborn products to third parties, requires the
consent of a third party for an effective transfer to the Buying Companies, such
consent is not obtained, and as a direct result thereof, the Buying Companies
are unable to use such asset, property or right in the Dearborn Business
substantially as used by the Grace Group prior to the Closing, then the Total
Purchase Price shall be decreased by an amount equal to the present value (using
a discount rate of 10%) of the reasonable incremen- tal cost to the Buying
Companies (net of any reduction in costs, such as rent expense, resulting from
the non-trans- fer of the asset) of obtaining a substantially similar
replacement. If such cost is to be incurred in a currency other than U.S.
dollars, the amount of the price reduction shall be computed in U.S. dollars
using the applicable exchange rate, as of the Valuation Date, referred to in
Section 2.4(a). If the asset is the Grace Group's owner- ship interest in the
Dearborn India JV or the Dearborn Japan JV, the parties stipulate that the
applicable price adjustments under this Section will be US $100,000 and US
$300,000 respectively.
4.D Termination Option. In the event that, in Grace's reasonable good
faith judgment, the aggregate effect of the provisions of Sections 4.A(c), 4.B
and 4.C will result in a reduction of the Total Purchase Price of US $60 million
or more, Grace will have the option in its sole discretion to terminate this
Agreement, unless Buyer
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shall stipulate that the total of such price reductions shall in any event be
less than US $60 million. If such option is not exercised, nothing set forth
herein shall limit or otherwise affect the amounts due pursuant to Sections
4.A(c), 4.B and 4.C whether such adjustments are paid at Closing or otherwise.
Grace's delivery of any statement indicating the amount of one or more price
reductions, even if in excess of the amount specified in the prior sentence,
shall not be deemed to be a waiver of Grace's option to terminate this Agreement
pursuant to this Section.
4.7 Payment of Adjustments.
(a) (i) Promptly after the Closing Net Amount has been finally
determined, Grace shall deliver to Buyer a statement of the Total Purchase Price
reflecting the final Closing Net Amount. After receipt of such statement, the
Allocation and the Specific Allocation shall be amended to reflect the Total
Purchase Price as so adjusted, as Grace and Buyer shall mutually agree, giving
effect to the country or countries which account for any such adjustment.
(ii) No later than 15 calendar days after
delivery by Grace of the statement of the Total Purchase Price as adjusted for
the final Closing Net Amount, all resulting Local Purchase Price adjustments
shall be settled simultaneously based on such statement. If any such resulting
Local Purchase Price exceeds the amount previously paid with respect thereto,
the appropriate Buying Company shall pay the amount due to the appropriate
Selling Company in the manner provided in Section 4.7(c); if any such resulting
Local Purchase Price is less than the amount previously paid with respect
thereto, the appropriate Selling Company shall refund the amount of the
overpayment to the appropriate Buying Company in the manner provided in Section
4.7(c). If at the time of settlement Grace and Buyer have not agreed on the
amended Allocation and Specific Allocation, Grace on behalf of the Selling
Companies shall pay to Buyer on behalf of the Buying Companies the aggregate
amount of any net overpayment, or Buyer on behalf of the Buying Companies shall
pay to Grace on behalf of the Selling Companies the aggregate amount of the net
payment due.
(b) (i) Promptly after the Contribution Margin
Adjustment has been finally determined, Grace shall deliver
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to Buyer a statement of the Total Purchase Price reflecting the final
Contribution Margin Adjustment. After receipt of such statement, the Allocation
and the Specific Allocation shall be amended to reflect the Total Purchase Price
as so adjusted, as Grace and Buyer shall mutually agree, giving effect to the
country or countries which account for any such adjustment.
(ii) If Grace delivers the statement of the
Total Purchase Price as adjusted for the final Contribution Margin Adjustment
after the Closing, then not later than 15 calendar days thereafter, all
resulting Local Purchase Price adjustments shall be settled simultaneously based
on such statement. If any such resulting Local Purchase Price exceeds the amount
previously paid with respect thereto, the appropriate Buying Company shall pay
the amount due to the appropriate Selling Company in the manner provided in
Section 4.7(c); if any such resulting Local Purchase Price is less than the
amount previously paid with respect thereto, the appropriate Selling Company
shall refund the amount of the overpayment to the appropriate Buying Company in
the manner provided in Section 4.7(c). If at the time of settlement Grace and
Buyer have not agreed on the amended Allocation and Specific Allocation, Grace
on behalf of the Selling Companies shall pay to Buyer on behalf of the Buying
Companies the aggregate amount of any net overpayment, or Buyer on behalf of the
Buying Companies shall pay to Grace on behalf of the Selling Companies the
aggregate amount of the net payment due.
(c) All adjusting payments with respect to the Local Purchase
Prices shall be settled by payments in the United States in U.S. dollars between
Grace, as agent for the Grace Group, and Buyer, as agent for the Buyer Group,
and any amounts due from the Grace Group shall be set off against any amounts
due from the Buyer Group to the extent practicable. However, any adjustment to a
Local Purchase Price with respect to which payment was made at the Closing in
any currency other than U.S. dollars pursuant to Section 3.6, shall be first
determined in U.S. dollars and then paid in an amount of local currency equal to
the dollar value so determined (based on the Payment Exchange Rate on the
Business Day prior to the date payment is made). Payment shall be made at the
local office of the recipient within the applicable country or at such other
place within such country as the recipient shall request.
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(d) If the net amount of all adjusting payments under
subsection (a), or under subsection (b) if paid after the Closing, (regardless
of where payment is made) is in excess of US $100,000, Buyer or Grace shall pay
interest to the other on the entire amount of the net adjusting payment under
such subsection owed for the period from the Closing Date to the date of
payment, at the LIBOR Rate plus three percentage points.
ARTICLE 5
REPRESENTATIONS BY GRACE
Grace represents and warrants to Buyer and the other Buying Companies
as follows:
5.1 Grace Corporate Status and Authority. Grace is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Dearborn U.S. is a limited partnership duly
formed, validly existing and in good standing under the laws of Delaware. Each
Selling Company (other than Grace) is a direct or indirect Subsidiary of Grace.
Each member of the Grace Group that is a party to this Agreement or one of the
other Transaction Documents has all requisite power and authority to own, lease
and operate its properties and to carry on the Dearborn Business as now being
conducted, except as set forth on the Schedule to this Section or where the
failure to have such power and authority would not, individually or in the
aggregate, have a Material Adverse Effect. Each member of the Grace Group has
full legal power to execute and deliver each Transaction Document to which it is
or will be a party, and will, prior to the Closing, have full legal power to
perform its obligations under such Transaction Document and to consummate the
transactions contemplated thereby. The execution and delivery by each member of
the Grace Group of each Transaction Document to which it is or will be a party,
its performance of its obligations under such Transaction Document and the
consummation of the transactions contemplated thereby will, prior to the
Closing, have been duly authorized by all required corporate action of such
member, or by partnership action in the case of Dearborn U.S. Each such member
of the Grace Group has duly and validly executed and delivered each Transaction
Document to which it is a party that is being executed and delivered
simultaneously with this Agreement, and each such Transaction Document
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constitutes a legal, valid and binding obligation of such member, enforceable
against such member in accordance with its terms. Each Transaction Document to
be executed by any member of the Grace Group at the Closing, when executed and
delivered, will be duly and validly executed and delivered by, and will
constitute a legal, valid and binding obligation of such member and be
enforceable against such member in accordance with its terms. Prior to the
Closing, Grace will have furnished or made available to Buyer complete and
correct copies of the Certificate of Incorporation and ByLaws (or equivalent
organizational documents), as in effect at the Closing, of each of the Selling
Companies.
5.2 Transferred Companies' Organizational Status and
Capitalization.
(a) Each of the Transferred Companies (other than Dearborn
U.S.) is a corporation duly organized, validly existing and in good standing (or
the equivalent thereof) under the laws of its jurisdiction of organization set
forth in the Schedule to this Section and each of the Transferred Companies has
all requisite power and authority to own, lease and operate its properties and
to carry on its business as now being conducted, except as set forth on the
Schedule to this Section or where the failure to have such power and authority
would not, individually or in the aggregate, have a Material Adverse Effect.
Each of the Transferred Companies is duly qualified or licensed to do business
as a foreign corporation and is in good standing in each jurisdiction in which
property is owned or leased by the Transferred Company or the conduct of the
Transferred Company's business makes such qualification or license necessary,
except as set forth on the Schedule to this Section or where the failure to be
so qualified or licensed would not have a Material Adverse Effect. Grace has
heretofore furnished or made available to Buyer complete and correct copies of
the Certificate of Incorporation and By-Laws (or equivalent organizational
documents), as in effect at the Closing, of each of the Transferred Companies.
(b) The Schedule to this Section also sets forth a true and
complete listing of the authorized, issued and outstanding capital stock of each
Transferred Company (other than Dearborn U.S.) and the ownership of such capital
stock. Each Selling Company that owns such capital stock has good and valid
title to the capital stock owned
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by it, in each case free and clear of all Liens. Except as set forth on the
Schedule to this Section, there are no outstanding shares of capital stock or
other voting securities of any Transferred Company. There are (i) no outstanding
subscriptions, warrants, options, convertible securities or other rights to
purchase or otherwise acquire any capital stock of any such Transferred Company,
except repurchase rights of the Grace Group with respect to capital stock held
by certain individuals; (ii) no securities of any of the Selling Companies or
any of their affiliates (including, without limitation, the Transferred
Companies) convertible into or exchangeable for shares of capital stock or
voting securities of any Transferred Company; (iii) no obligations of the
Selling Companies or any of their affiliates (including, without limitation, the
Transferred Companies) to issue, deliver or sell any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of any Transferred Company; and (iv) except as otherwise
indicated on the Schedule to this Section, there are no equity equivalents,
interests in the ownership or earnings of any Transferred Company or other
similar rights, other than the capital stock of the Transferred Companies. A
member of the Grace Group has the right to repurchase all the shares of the
Transferred Companies not owned by the Selling Companies. The outstanding
capital stock of each such Transferred Company is duly authorized, validly
issued, fully-paid and non-assessable and free of any preemptive rights in
respect thereto, other than any such preemptive rights imposed by statutory law.
(c) The Schedule to this Section sets forth a complete list of
all jurisdictions for which Dearborn U.S. is duly qualified or licensed to do
business and Dearborn U.S. is in good standing in each of those jurisdictions.
Grace is the sole general partner in Dearborn U.S. and owns a 1% partnership
interest. LB Realty, a wholly owned Subsidiary of Grace, is the sole limited
partner in Dearborn U.S. and owns a 99% partnership interest. Grace and LB
Realty each have good and valid title to the respective partnership interests
owned by it. The ownership of such partnership interests in each case is free
and clear of all Liens. There are (i) no outstanding subscriptions or other
rights to purchase or otherwise acquire any partnership interest in Dearborn
U.S., (ii) no securities of any of the Selling Companies or any of their
affiliates (including, without limitation, the Transferred Companies)
convertible
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into or exchangeable for any partnership interest in Dearborn U.S., (iii) no
obligations of any of the Selling Companies or any of their affiliates
(including, without limitation, the Transferred Companies) to issue, deliver or
sell any partnership interest, voting securities or securities convertible into
or exchangeable for partnership interests in Dearborn U.S. and (iv) no
partnership interest equivalents, interests in the partnership of Dearborn U.S.
or other similar rights. Except as set forth in the Schedule to this Section, no
Transferred Company owns or controls, directly or indirectly, any capital stock,
or other securities of, or has any ownership interest in, any corporation,
partnership or other entity.
(d) The Schedule to this Section sets forth a true and
complete list of all dividends or other distributions declared or paid by any
Transferred Company since December 31, 1995.
5.3 Transferred Joint Ventures - Corporate Status and Capitalization.
Each Transferred Joint Venture is a corporation duly organized and validly
existing under the laws of its jurisdiction of organization set forth in the
Schedule to this Section. The Schedule to this Section also sets forth a true
and complete listing of the authorized, issued and outstanding capital stock of
each Transferred Joint Venture and the ownership of such capital stock. Except
as set forth in the Schedule to this Section, (a) Grace and Dearborn Netherlands
have good and valid title to the Dearborn India JV Shares and the Dearborn Japan
JV Shares respectively in each case is free and clear of all Liens, (b) there
are no outstanding subscriptions, warrants or other rights to purchase or
otherwise acquire any capital stock of either Transferred Joint Venture, (c)
there are no securities of the Selling Companies or any of their affiliates
(including, without limitation, the Transferred Companies) convertible into or
exchangeable for shares of capital stock or voting securities of any Transferred
Joint Venture, and (d) there are no obligations of the Selling Companies or any
of their affiliates (including, without limitation, the Transferred Companies)
to issue, deliver or sell any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of any
Transferred Joint Venture. The outstanding capital stock of each Transferred
Joint Venture is validly issued, fully-paid and non-assessable. The Schedule to
this Section sets forth a true and complete
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list of all dividends declared or paid by each Transferred Joint Venture since
December 31, 1995.
5.4 No Conflict. Except as set forth on the Schedule to this Section,
the execution and delivery of each Transaction Document by each member of the
Grace Group that is or will be a party thereto, and the consummation of the
transactions contemplated by such Transaction Document, do not and will not (a)
contravene or conflict with the charter documents, by-laws or equivalent
organizational documents of such member, (b) result in the breach or termination
of, or constitute a default under (with or without the giving of notice or lapse
of time or both) any agreement, contract or license binding upon any such member
of the Grace Group, which breach, termination or default would have a Material
Adverse Effect, or (c) result in breach of any of the provisions of, or
constitute a default under, any judgment, order, decree, law or regulation, to
which any such member is a party or by which it is bound, which breach or
default would materially adversely affect the ability of such member to execute
and deliver this Agreement or any other Transaction Document to which it is or
will be a party or to perform its obligations hereunder or thereunder.
5.5 Absence of Title Claims.
(a) Except with respect to Real Property (as defined in
subsection (b) of this Section) and as specified in the Schedule to this
Section, neither the Total Dearborn Assets nor the assets of any of the
Transferred Companies are subject to any Lien, covenant, restriction, easement
or other such encumbrance, other than those Liens, covenants, restrictions,
easements, and encumbrances that would not, individually or in the aggregate,
have a Material Adverse Effect. The material owned tangible assets are in good
condition and, if applicable, in good working order, other than with respect to
such assets as to which the failure to be in good working order or condition
would not have a Material Adverse Effect. The Selling Companies and their
affiliates have complete and unrestricted power and the unqualified right to
sell, assign and transfer to the Buying Companies all of the Total Dearborn
Assets owned by them, and upon consummation of the transactions contemplated by
this Agreement, the Buying Companies will acquire or the Transferred Companies
will have good, valid and marketable title to the Total Dearborn Assets, free
and clear of
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all Liens, except for Liens which individually or in the aggregate would not
have a Material Adverse Effect. The bills of sale, deeds, endorsements,
assignments and other instruments to be executed and delivered to Buyer by the
Selling Companies at the Closing will be valid and binding obligations of the
Selling Companies enforceable in accordance with their terms.
(b) To the Knowledge of the Executives (except with respect to
Real Property) there are no other defects in any Selling Company's title to any
of the Total Dearborn Assets or in the title of the Transferred Companies to
their respective assets that would, individually or in the aggregate, have a
Material Adverse Effect.
(c) Schedule 5.5(c) sets forth (i) a complete and correct list
of all of the real property owned by Grace or its affiliates which is included
in the Total Dearborn Assets and all of the real property owned by the
Transferred Companies (the "Owned Real Property") and (ii) a list of all
material real property leased by Grace or its affiliates which is included in
the Total Dearborn Assets and a list of all material real property leased by the
Transferred Companies (the "Leased Real Property", and together with the Owned
Real Property, the "Real Property"). Except as specified in the Schedule to this
Section, each Selling Company or Transferred Company, as the case may be, has
good, valid and insurable (to the extent insurance is available in the
jurisdiction) title to the Owned Real Property, or a valid leasehold interest in
the Leased Real Property, in each case, free of all Liens, covenants,
restrictions, easements or other such encumbrances which would materially
interfere with the continued use or operation of such Owned Real Property or
Leased Real Property in the manner heretofore used or operated by the Grace
Group in its conduct of the Dearborn Business.
(d) To the Knowledge of the Executives, neither the Selling
Companies nor the Transferred Companies has received any written notice or
communication from a Governmental Authority advising it of any (i) general or
special assessment relating to any of the Real Property or (ii) condemnation or
eminent domain proceedings pending or threatened against any of the Real
Property, that would have a Material Adverse Effect.
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5.6 Financial Statements. As of the Closing, the Schedule to this
Section will contain copies of the 1995 Dearborn Statement of Net Assets and the
1995 Dearborn Statement of Pretax Income, both audited by Price Waterhouse, and
Price Waterhouse's reports thereon. Such statements are referred to collectively
as the "Dearborn Financial Statements." At the Closing, (i) the 1995 Dearborn
Statement of Net Assets will present fairly, in all material respects, the net
assets of the Dearborn Business, as of December 31, 1995, in accordance with the
terms of this Agreement, as described in Note 1 thereto, in conformity with U.S.
GAAP and the 1995 Dearborn Statement of Pretax Income (which will include a line
item identified as Contribution Margin determined in accordance with Dearborn
Business practice) will present fairly, in all material respects, the pretax
results of operations of the Dearborn Business for 1995, on the basis of
presentation described in Note 1 thereto, in conformity with U.S. GAAP;
provided, however, that the Dearborn Financial Statements will not be a complete
presentation of the Dearborn Business's financial condition and results of
operations as if it were a separate stand-alone operation.
5.7 Intentionally Omitted.
5.8 Litigation.
(a) Except as set forth in the Schedule to this Section, there
are no claims, actions, suits or proceedings pending or, to the Knowledge of the
Executives, threatened, against any Selling Company or any Transferred Company
that (i) individually or in the aggregate, would reasonably be expected to have
a Material Adverse Effect, (ii) would reasonably be expected to materially
challenge or prevent, enjoin, alter or delay the transactions contemplated by
this Agreement or the other Transaction Documents, or (iii) alleges any material
criminal action or inaction directly relating to the Dearborn Business or the
Total Dearborn Assets.
(b) Except as set forth in the Schedule to this Section,
neither the Dearborn Business, the Intellectual Property Rights, any of the
assets included in the Total Dearborn Assets nor any of the assets of the
Transferred Companies is subject to any order, writ, judgment, injunction,
decree, determination or award that has, or that
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would reasonably be expected to have, a Material Adverse
Effect.
(c) Except as set forth in the Schedule to this Section, there
are no pending or, to the Knowledge of the Executives, threatened governmental
investigations of the Dearborn Business, any of the Total Dearborn Assets or any
of the Transferred Companies, including, but not limited to, investigations
relating to compliance with Environmental Law, that would reasonably be expected
to have a Material Adverse Effect.
5.9 Asset Disposition or Loss. Except as set forth in the Schedule to
this Section, since December 31, 1995, no Selling Company or Transferred Company
(i) has disposed of (other than in the ordinary course of business), or suffered
an uninsured casualty loss with respect to, any of the assets used by such
Selling Company or Transferred Company in connection with the Dearborn Business
that had a book value at the time of such disposition or loss of greater than US
$50,000 or (ii) has entered into any transaction or conducted its business
operations other than in the ordinary course of business, consistent with past
practices. Since December 31, 1995 to the date hereof, the Dearborn Business has
not suffered a Material Adverse Effect.
5.10 Insurance.
(a) To the Knowledge of the Executives, the Schedule to this
Section sets forth a complete and correct summary description of the insurance
coverage maintained by or on behalf of the Dearborn Business in Argentina,
Australia, Belgium, Brazil, Canada, Chile, France, Germany, the Netherlands,
South Africa, Sweden, the United Kingdom or the United States;
(b) Each such insurance coverage is in full force and effect;
no notice of termination, cancellation or reservation of rights has been
received with respect to any such insurance coverage other than those as to
which, individually or in the aggregate, any termination, cancellation or
reservation of rights would not reasonably be expected to have a Material
Adverse Effect; and
(c) There is no default with respect to any provision
contained in any such insurance coverage; and
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there has not been any failure to give any notice or present any claim under any
such insurance coverage in a timely fashion or in the manner of detail required
by any such insurance coverage, except for any such failures, terminations,
cancellations, reservations or defaults, which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
5.11 Contracts.
(a) The Schedule to this Section lists the following contracts
and agreements included in the Total Dearborn Assets, Total Dearborn Liabilities
or the assets or liabilities of the Transferred Companies (together with the
Leased Real Property, the "Material Contracts"): (i) each loan, credit
agreement, indenture, note, mortgage, security agreement, loan commitment,
evidence of indebtedness, or other contract under which the Dearborn Business is
a borrower of a material amount of funds, excluding customary credit terms with
suppliers; (ii) each written agreement under which it is reasonably expected
that the Dearborn Business will make expenditures of more than US $500,000 per
year for the purchase of raw materials or supplies; or obtain receipts of more
than US $500,000 per year for the sale of its products and services; or make
expenditures or obtain receipts of more than US $200,000 per year for any other
purpose (in each case excluding employment agreements, non-blanket purchase
orders and sales orders entered into in the ordinary course of business
consistent with past practices); (iii) any contract entered into outside of the
ordinary course of the Dearborn Business that involves payment or receipt of
more than US $100,000; (iv) any contract that grants any Person a right of first
refusal or option to purchase or otherwise acquire any asset of the Dearborn
Business having a net book value of US $100,000 or more; and (v) any strategic
alliance agreement that in the opinion of the Executives is important for the
future prospects of the Dearborn Business or any material joint venture
agreement.
(b) To the Knowledge of the Executives, (i) each of the
Material Contracts is in full force and effect; and (ii) no Selling Company or
Transferred Company has received any written notice of cancellation or
termination of any of the Material Contracts. Grace has heretofore delivered or
made available to Buyer complete copies of all such agreements as currently in
effect.
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(c) To the Knowledge of the Executives, no Material Contract
is the subject of or has been threatened to be made the subject of, any
arbitration, suit, or other legal proceeding. To the Knowledge of the
Executives, there exists no event of default or occurrence or act on the part of
the Selling Companies or any of their affiliates or on the part of the other
parties to the Material Contracts which constitutes or would constitute (with
notice or lapse of time or both) a breach or default under any of the Material
Contracts.
(e) None of the Selling Companies or the Transferred Companies
has granted a security interest in any or all of its rights under any Material
Contract or assigned any or all of its rights under any Material Contract,
including, without limitation, the right to any payment or proceeds thereunder.
5.12 Labor and Employment. The Schedule to this Section lists (a) each
collective bargaining or other similar agreement with a labor union or similar
organization that as of the date hereof covers any employee of Dearborn U.S. and
(b) each Dearborn Business Employee covered by an individual (non-standard)
written employment agreement that will remain in effect after the Closing. Grace
has heretofore delivered or made available to Buyer complete copies of all such
agreements as currently in effect. Except as set forth in the Schedule to this
Section, (i) there is no strike, slowdown, work stoppage or lockout relating to
labor or employment matters pending or, to the Knowledge of the Executives,
threatened against or affecting the Dearborn Business, except where such strike,
slowdown, work stoppage or lockout would not reasonably be expected to have a
Material Adverse Effect, (ii) there is no unfair labor practice, charge or other
proceeding involving the Dearborn Business pending, or, to the Knowledge of the
Executives, threatened before the National Labor Relations Board and (iii) the
Executives do not have any Knowledge of any current union organizing activities
among employees of Grace or any of its affiliates with respect to the Dearborn
Business. The Transferred Companies are in compliance with the requirements of
the Worker Adjustment and Retraining Notification Act ("WARN") and have no
liabilities pursuant to WARN.
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5.13 Employee Benefit Plans.
(a) The Schedule to this Section lists each written employee
benefit plan that provides retirement, pension, severance, health care,
long-term disability income or life insurance benefits (other than plans
maintained or required by applicable law or Governmental Authorities, which are
hereinafter sometimes referred to collectively as "Governmental Plans"), that as
of the date hereof covers any Dearborn Business Employee in Argentina,
Australia, Belgium, Brazil, Canada, Chile, France, Germany, the Netherlands,
South Africa, Sweden, the United Kingdom or the United States, and each written
employee benefit plan or contract currently maintained by any Transferred
Company that provides such benefit coverages, other than Governmental Plans.
Grace has heretofore delivered or made available to Buyer true and complete
copies of all such plans that are administered by the Grace Group, and all such
contracts to which any Transferred Company is a party, as currently in effect.
(b) Except as listed on the Schedule to this Section, with
respect to each Seller Plan from which any assets are transferred to any Buyer
Plan or which is assumed by the Buyer Group (each such plan, a "Transferred
Plan"): (i) no Transferred Plan is subject to Title IV of the Employee
Retirement Income Security Act of 1974; (ii) each Transferred Plan (except for a
Transferred Plan described in Section 5.13(b)(iii)) has been operated and
administered in all material respects in accordance with its terms and
applicable law, except to the extent otherwise disclosed to the Buyer Group by
the Grace Group prior to the date of the transfer of assets from, or the
assumption of, such Transferred Plan; and (iii) with respect to a Transferred
Plan maintained in a jurisdiction where applicable law requires that the Buyer
Group (or a plan maintained by the Buyer Group) assume any portion of the assets
and/or liabilities of such Transferred Plan, each such Transferred Plan has been
operated and administered in all material respects in accordance with its terms
and applicable law.
(c) The consummation of the transactions contemplated by this
Agreement will not: (i) entitle any current or former Dearborn Business employee
or officer to receive from Buyer or any Buyer Plan any severance pay,
unemployment compensation or any other similar payment, as a result
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of the terms of any plan or arrangement maintained by the Grace Group or (ii)
accelerate the time of payment or vesting, or increase the amount, of
compensation due any such employee or officer from the Buyer Group, as a result
of the terms of any plan or arrangement maintained by the Grace Group; except as
set forth by this Agreement and in the Employee Benefits Agreement.
5.14 Environmental Compliance.
(a) Except as set forth on Schedule 5.14, none of the real
property currently, or to the Knowledge of the Executives, formerly, owned or
operated by the Dearborn Business is listed on the federal National Priorities
List ("NPL") or on lists of properties requiring investigation or cleanup that
have been compiled pursuant to state or foreign laws that are analogous to
CERCLA.
(b) Except as set forth on Schedule 5.14, to the
Knowledge of the Executives:
(i) The Dearborn Business is in compliance
with all applicable Environmental Laws, including having obtained all material
permits, licenses and authorizations which are required under such laws
("Environmental Authorizations"), except where the failure to so comply with
such Environmental Laws, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect. All such Environmental
Authorizations are in effect, no appeal nor any other action is pending to
revoke any such Environmental Authorization, and the Dearborn Business is in
full compliance with all terms and conditions of such Environmental
Authorizations, except where the failure to comply with such Environmental
Authorizations, or the existence of any appeal or action to revoke such
Environmental Authorizations, would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
(ii) Neither Grace nor the Dearborn Business
has received written notice from any third party, including, but not limited to,
any Governmental Authority, alleging a Toxic Tort Claim or Chromium Claim or
that the Dearborn Business or the Total Dearborn Assets are in violation of any
applicable Environmental Law or otherwise liable under any applicable
Environmental Law, which claim, violation or liability is unresolved. There is
no pending or
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threatened Toxic Tort Claim or Chromium Claim or claim, lawsuit, or
administrative proceeding under any Environmental Law against the Dearborn
Business or the Total Dearborn Assets.
(iii) There is no pending or threatened
Toxic Tort Claim or Chromium Claim or claim, lawsuit, or administrative
proceeding under any Environmental Law against any Person whose liability has
been either retained or assumed contractually by the Dearborn Business.
(iv) There have been no releases, spills, or
discharges of Hazardous Substances on or underneath any of the real property
currently or formerly owned or operated by the Dearborn Business that would
reasonably be expected to have a Material Adverse Effect.
5.15 Intellectual Property.
(a) Schedule 5.15(a) sets forth a true and complete list of
all Scheduled Intellectual Property that is directly and exclusively used in the
Dearborn Business.
(b) Except as set forth in Schedule 5.15(b), or to the extent
that the inaccuracy of any of the following would not reasonably be expected to
have a Material Adverse Effect:
(i) the Intellectual Property Rights as-
signed or licensed to Buyer include all
intellectual property rights which (1)
are necessary to or are used in the
operation of the Dearborn Business; or
(2) have been developed or are under
development for use in the Dearborn
Business.
(ii) the Selling Companies and the Transferred
Companies, as the case may be, own or are
authorized to use, in each case, free and
clear of all Liens, all Intellectual
Property Rights;
(iii) Grace and its affiliates have good and
unencumbered title to the Scheduled
Intellectual Property and to the DEAR-
BORN name (as set forth in subpara-
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graph (3) of Section (A) of the definition
of Intellectual Property Rights), and to
the Knowledge of the Executives, have good
and unencumbered title to the other
Intellectual Property Rights described in
subparagraphs (2) through (5) of Section
(A) of the definition of Intellectual
Property Rights (hereinafter
"Non-Scheduled Intellectual Property");
(iv) there is no Lien on the right of the
Selling Companies to transfer to Buyer
any of the Intellectual Property Rights
listed in Section (A) of the definition
of Intellectual Property Rights, or to
grant licenses to the Intellectual
Property Rights described in Section
(B) of such definition, as herein con-
templated, other than any such Liens
that alone or in the aggregate would
not result in a Material Adverse Ef-
fect;
(v) no Intellectual Property Rights have been
authorized to be disclosed to any Person who
is not an affiliate of Grace, other than in
the ordinary course of business or pursuant
to an obligation of confidentiality binding
upon such Person; and
(vi) to the Knowledge of the Executives and
except in the exercise of reasonable
business judgement in the ordinary
course of business, each copyright reg-
istration, Patent and registered trade-
mark and application therefor listed on
Schedule 5.15(a) is in proper form, not
disclaimed, and has been duly main-
tained, including the submission of all
necessary filings in accordance with
the legal and administrative require-
ments of the appropriate jurisdictions
except with respect to use requirements
as to trademarks.
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Except as set forth in Schedule 5.15(b), to the Knowledge of the
Executives:
(i) there are no pending oppositions,
cancellations, invalidity proceedings,
interferences or reexamination proceedings
with respect to the Scheduled Intellectual
Property;
(ii) the current operation of the Dearborn
Business does not infringe upon or, with
respect to trade secrets, otherwise violate
any intellectual property right of any third
party;
(iii) no third party unrelated to the Grace
Group is infringing upon or, with respect
to trade secrets, is otherwise violating
any Intellectual Property
Rights;
(iv) none of the Selling Companies or any of
their respective affiliates has received
notice of any claims and there are no
pending claims by any Person relating to the
ownership or use of the Intellectual
Property Rights.
(c) Schedule 5.15(c) sets forth a true and complete list of
all Intellectual Property Licenses. Except as set forth on Schedule 5.15(c), no
Person that is not a member of the Grace Group has been granted any right or
license to use any Intellectual Property Rights by any Selling Company or
Transferred Company.
(d) Schedule 5.15(d) sets forth a true and complete list of
all agreements between any Selling Company or Transferred Company, on the one
hand, and any Person on the other, which (i) is not listed on Schedule 5.15(c);
and (ii) conveys rights under Scheduled Intellectual Property or Non-Scheduled
Intellectual Property to any Person that is not a member of the Grace Group, or
grants rights under any intellectual property owned by any such Person that is
directly and exclusively used in the Dearborn Business. Grace has heretofore
delivered or made available to Buyer true and complete copies of such agreements
as are in effect.
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5.16 Non-Environmental Licenses and Permits.
Except as set forth in the Schedule to this Section, and specifically
excluding all environmental matters:
(a) (i) The Selling Companies and the Transferred Companies
have obtained or have duly applied for all material permits, licenses or other
governmental authorizations to conduct the Dearborn Business, as it is currently
conducted, and (ii) to the Knowledge of the Executives, such permits and
licenses are valid, subsisting in full force and effect, and each of the Selling
Companies and the Transferred Companies has fulfilled its obligations under such
permits and licenses, and (iii) no event has occurred which constitutes or,
after notice, or lapse of time, or both, would constitute a default or violation
under such permits or licenses or would permit revocation or termination of any
such permits or licenses, other than any such default, violation, revocation, or
termination that individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect.
(b) Since December 31, 1995, no written warning notice, notice
of violation or probable violation, notice of revocation, or other written
communication from or on behalf of any Governmental Authority has been received
by any Selling Company or Transferred Company, which violation has not been
corrected or situation otherwise settled, alleging (i) any violation of any such
permit, license or authorization, or (ii) that any Selling Company or
Transferred Company requires any such license, permit or authorization for the
Dearborn Business not currently held by them.
(c) No Selling Company or Transferred Company is in violation
of, or has violated, in any such case directly in connection with the conduct of
the Dearborn Business, any applicable provisions of any laws, rules, statutes,
orders, ordinances or regulations which, individually or in the aggregate, has
resulted or would reasonably be expected to result in a Material Adverse Effect.
(d) Except as set forth on the Schedule to this Section,
neither the Selling Companies nor any of their affiliates (including, without
limitation, the Transferred Companies) is in violation of, or has violated, in
any such case in connection with the conduct of the Dearborn Busi-
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ness, any applicable provisions of any laws, rules, statutes, orders, ordinances
or regulations which, individually or in the aggregate, has resulted or would
reasonably be expected to result in a Material Adverse Effect.
5.17 Brokers and Finders. No broker or finder has acted directly or
indirectly for Grace or any of the other Selling Companies in connection with
this Agreement or the transactions contemplated hereby, except for Merrill Lynch
Pierce Fenner & Smith Incorporated whose fees and expenses will be paid by
Grace.
5.18 No Undisclosed Liabilities. Except as and to the extent set forth
in the 1995 Dearborn Statement of Net Assets, or the notes thereto, neither the
Selling Companies nor the Transferred Companies had at December 31, 1995 any
liabilities (absolute, accrued, contingent or otherwise, known or unknown)
relating to the Dearborn Business which are required by the U.S. GAAP to be
reflected in a consolidated balance sheet or set forth in the notes thereto.
Except as and to the extent set forth in Schedule 5.18, since December 31, 1995,
neither the Selling Companies nor the Transferred Companies has incurred any
liabilities (absolute, accrued, contingent or otherwise, known or unknown)
relating to the Dearborn Business and required by U.S. GAAP to be reflected on a
consolidated balance sheet except for liabilities incurred in the ordinary
course of business since December 31, 1995 which would not individually or in
the aggregate, be reasonably expected to have a Material Adverse Effect.
5.19 Assets Necessary for Conduct of the Dearborn Business. The assets
to be transferred to the Buying Companies pursuant to this Agreement or made
available to the Buying Companies pursuant to the Ancillary Agreements
constitute all of the assets necessary to conduct the production, logistics,
marketing, sales and laboratory (research, applications and customer service)
functions of the Dearborn Business, as currently conducted and are all of the
assets used with respect to such functions in the Dearborn Business as currently
conducted.
5.20 Accounts Receivable. All accounts receivable included in the
Total Dearborn Assets and all accounts receivable of the Transferred Companies
represent unpaid actual billings for sales made in the ordinary course of
business and represent the legal, valid and binding obliga-
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tions of the obligor thereon or adequate reserves have been established for
those accounts receivable which are not valid and binding or are otherwise
uncollectible. The Dearborn Financial Statements contain adequate and sufficient
reserves for bad debts in respect of accounts receivable of the Dearborn
Business.
5.21 Inventory. All of the inventories included in the Total Dearborn
Assets and all inventories of the Transferred Companies consist of a quality and
quantity useable and saleable in the ordinary course of business or adequate
reserves for obsolete or below standard quality materials have been provided
therefor. Inventories of the Dearborn Business are valued in the Dearborn
Financial Statements at the lower of cost or market.
5.22 Disclosure. To the Knowledge of the Executives, no representation
or warranty of any of the Selling Companies contained in this Agreement, in
written certificates delivered pursuant to this Agreement or in any of the other
Transaction Documents (including in the Schedules attached hereto or thereto)
contains any untrue statement of material fact or omits to state any material
fact necessary, in order to make the statements made herein or therein, in light
of the circumstances under which they were made, not misleading.
5.23 Other Matters. The Dearborn Business has no liability or
responsibility with respect to any personal injury or property damage claims
that have been brought against Grace or any Subsidiary of Grace relating to the
sale of asbestos-containing products.
ARTICLE 6
REPRESENTATIONS OF BUYER
Buyer represents and warrants to Grace and the other Selling Companies
as follows:
6.1 Buying Companies' Corporate Status. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Each Buying Company (other than Buyer) is a
direct or indirect subsidiary of Buyer. Each member of the Buyer Group-
that is a party to this Agreement or one of the other Transaction Documents has
full legal power to execute and
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deliver each Transaction Document to which it is or will be a party, and will,
prior to the Closing, have full legal power to perform its obligations under
such Transaction Document and to consummate the transactions contemplated
thereby. The execution and delivery by each member of the Buyer Group of each
Transaction Document to which it is or will be a party, its performance of its
obligations under such Transaction Document and the consummation of the
transactions contemplated thereby, will prior to the Closing have been duly
authorized by all required corporate action of such member. Each such member of
the Buyer Group has duly and validly executed and delivered each Transaction
Document to which it is a party that is being executed and delivered
simultaneously with this Agreement, and each such Transaction Document
constitutes a legal, valid and binding obligation of such member, enforceable
against such member in accordance with its terms. Each Transaction Document to
be executed by any member of the Buyer Group at the Closing, when executed and
delivered, will be duly and validly executed and delivered by, and will
constitute a legal, valid and binding obligation of such member and be
enforceable against such member in accordance with its terms.
6.2 No Conflict. Except as set forth on the Schedule to this Section,
the execution and delivery of each Transaction Document by each member of the
Buyer Group that is or will be a party thereto, and the consummation of the
transactions contemplated by such Transaction Document, do not and will not (a)
contravene or conflict with the charter documents, by-laws or equivalent
organizational documents of such member, (b) result in the breach or termination
of, or constitute a default under (with or without the giving of notice or lapse
of time or both) any agreement, contract or license binding upon any such member
of the Buyer Group which breach, termination or default would have a Material
Adverse Effect, or (c) result in breach of any of the provisions of, or
constitute a default under, any judgment, order, decree, to which it is a party
or by which it is bound, which breach or default would materially adversely
affect the ability of such member to execute and deliver this Agreement or any
other Transaction Document to which it is or will be a party or to perform its
obligations hereunder or thereunder.
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6.3 Sufficient Funds. On the Closing Date, the Buying Companies
will have sufficient funds to consummate the transactions contemplated by this
Agreement.
6.4 Brokers and Finders. No broker or finder has acted directly or
indirectly for Buyer or any of its affiliates in connection with this Agreement
or the transactions contemplated hereby, except for J.P. Morgan & Co., whose
fees and expenses will be paid by Buyer.
ARTICLE 7
INVESTIGATION BY THE BUYING COMPANIES
Buyer acknowledges the following:
7.1 Investigation. The Buying Companies have conducted their own
investigation and made their own evaluation of the Dearborn Business, the
Transferred Companies, the Transferred Joint Ventures, the Total Dearborn Assets
and the Total Dearborn Liabilities.
7.2 Financial Information. As part of their investigation, the Buying
Companies have been given financial statements, forecasts, projections, opinions
and other oral or written information and materials with respect to the Dearborn
Business (the "Additional Financial Information") by Grace, other members of the
Grace Group or their respective representatives. There are uncertainties
inherent in attempting to make projections and forecasts, and the Buying
Companies are familiar with such uncertainties. The Buying Companies have made
their own evaluation of the Additional Financial Information. Neither Grace nor
any other member of the Grace Group is making any representations or warranties
with respect to the Additional Financial Information or the Dearborn Financial
Statements except for the specific representations and warranties set forth in
Article 5.
7.3 No Additional Representations. Except for the specific
representations and warranties set forth in this Agreement, including the
Schedules hereto, the Ancillary Agreements or any certificate contemplated
hereby and delivered to Buyer in connection herewith, none of the Selling
Companies (nor any other member or affiliate of the Grace Group ) is making any
representation or warranty, express or implied, of any nature whatsoever.
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ARTICLE 8
COVENANTS OF THE SELLING COMPANIES
AND THE BUYING COMPANIES
8.1 Access and Inquiry. Between the date of this Agreement and the
Closing, the Selling Companies shall provide, and shall cause the Transferred
Companies (and, to the extent Grace has the right to do so, the Transferred
Joint Ventures) to provide, to the Buying Companies and their counsel, financial
advisors, auditors and other representatives, reasonable access to the
properties and facilities of the Dearborn Business (including reasonable access
to enable Buyer to conduct Phase I environmental investigations, but not Phase
II environmental investigations or other testing that may include invasive
procedures such as soil core borings or testing of environmental media), and
will, upon written request, permit the Buying Companies and their counsel,
financial advisors, auditors and other representatives to contact and make
reasonable inquiry of employees of the Selling Companies and the Transferred
Companies (and, to the extent Grace is able to arrange for such access and
inquiry, to the facilities and employees of the Transferred Joint Ventures)
regarding the Dearborn Business. Except for the details of any trade secrets and
other sensitive intellectual property, the Selling Companies shall, and shall
cause the Transferred Companies (and, to the extent Grace has the right to do
so, the Transferred Joint Ventures) to, make available to the Buying Companies
all books, records, and other financial data and files, where located, of the
Selling Companies, the Transferred Companies and the Transferred Joint Ventures
relating primarily to the Dearborn Business, to the extent reasonably requested
by any Buying Company. The Buying Companies acknowledge that the terms of the
confidentiality agreement dated November 15, 1995 between Grace and Buyer (the
"Confidentiality Agreement") shall apply to information obtained by any Buying
Company pursuant to the foregoing.
8.2 Hart-Scott and Other Filings. As promptly as practicable
after the date hereof, Grace and Buyer shall file or cause to be filed with
respect to this Agreement and the transactions contemplated hereby appropriate
Notification and Report Forms under the HSR Act and filings with Governmental
Authorities in other jurisdictions under similar statutes or foreign investment
statutes. Grace and
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Buyer shall cooperate to coordinate such filings, and to make reasonable efforts
to promptly respond to any request or inquiry by a Governmental Authority with
respect thereto. Each party will furnish to the other party such information and
reasonable assistance as such other party may reasonably request in connection
with the foregoing.
8.3 Intentionally Omitted.
8.4 Notices to Third Parties.
(a) The Buying Companies and the Selling Companies shall use
their reasonable best efforts to take or cause to be taken all action, to do or
cause to be done, and to assist and cooperate with the other parties hereto in
doing all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement. Without limiting the generality of the
foregoing, the parties hereto shall cooperate with one another: (i) in
determining whether action by or in respect of, or filing with, any Governmental
Authority (either domestic or foreign) is required, proper or advisable or any
actions, consents, waivers or approvals are required to be obtained from parties
to any contracts, in connection with the transactions contemplated by this
Agreement; (ii) in seeking to obtain any such actions, consents and waivers and
to make any such filings; and (iii) in negotiating alternative arrangements in
the event a governmental or third party (including, without limitation, a labor
union or works council) consent, permit, authorization or registration required
pursuant to the transactions contemplated hereby is not obtained on a timely
basis or in the event Buyer is unable to make necessary arrangements to
establish a buying entity in a certain jurisdiction, with the understanding that
such arrangements will be designed so as to put the parties in a position as
close as practicable to that which they would have been in had such consent,
permit, authorization, registration or action been obtained including, without
limitation, providing to such party the benefits and liabilities associated with
the ownership and operation of any assets subject to such consent, permit,
authorization, registration or action. Notwithstanding the foregoing, the
provisions of this Section shall not apply to any matters covered by the
provisions of Section 2.5 hereof, which matters shall continue to be covered by
Section 2.5. In case at any time after the Closing any further action is
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necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of each party hereto shall promptly take all such
necessary action.
(b) To the extent any party shall reasonably request, the
parties shall prepare and execute, with the assistance and advice of local
counsel, additional agreements reflecting the fundamental terms of this
Agreement to the extent required by local laws in order to effectuate the
transactions contemplated by this Agreement. Notwithstanding the foregoing, the
parties agree that this Agreement sets forth the complete agreement and
understanding of the parties with respect to the matters set forth herein and,
to the fullest extent permitted by law, shall be controlling in the event of any
conflict or inconsistency between the provisions hereof and the provisions of
any of such local agreements.
8.5 Reorganization of Dearborn Business in Brazil and Sweden. Prior to
the Closing, (a) Grace shall cause Grace Brazil to transfer to Holdings Brazil
the assets and liabilities of the Dearborn Business described in Part I of the
Schedule to this Section in exchange for shares of the capital stock of Grace
Brazil owned by Holdings Brazil, and (b) Grace shall cause Grace Sweden to
transfer to Dearborn Sweden as a capital contribution the assets and liabilities
described in Part II of the Schedule to this Section and thereafter, Grace shall
cause the Swedish Holding Company to purchase the Dearborn Sweden Shares from
Grace Sweden. All costs and expenses incurred by Grace or its affiliates in
connection with the reorganization referred to above shall be the obligation of
Grace and shall not be paid by Buyer or its affiliates.
8.6 Reasonable Best Efforts. In making its reasonable best efforts
under Sections 8.2 and 8.4, except as may be contemplated by Section 2.5, no
member of the Grace Group or the Buyer Group shall be required to make any
payment (other than for reasonable legal fees and routine filing fees) that it
is not presently contractually required to make, divest any assets (including,
but not limited to, assets of the Dearborn Business), make any change in the
conduct of its business or that of the Dearborn Business, accept any limitation
on the future conduct of its business or that of the Dearborn Business, enter
into any other agreement or arrangement with any Person that it is not presently
contractually required to enter
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into, accept any significant modification of any existing agreement or
arrangement, or agree to any of the foregoing.
8.7 Intentionally Omitted.
8.8 Covenant Not to Compete; No Solicitation.
(a) For a period of five years after the Closing Date, the
Selling Companies shall not, and shall cause their affiliates not to, directly
or indirectly: (i) engage in the Dearborn Business in those countries where the
Dearborn Business currently operates, or in the development, registration,
formulation, sale or distribution of any products primarily directed to a market
that competes with the Dearborn Business as currently conducted including,
without limitation, products that are the result of discoveries or development
by the Grace Group after the Closing Date or (ii) invest in, manage, operate,
join or control as a partner, stockholder, consultant or otherwise, any Person
that competes with the Dearborn Business in any jurisdiction where the Dearborn
Business is currently conducted (a "Buyer Competitive Business"); provided,
however, that nothing in this Section 8.8 shall prohibit the Selling Companies,
or their affiliates, from owning up to 5% of the outstanding voting securities
of any publicly traded entity; provided, further, that nothing in this Section
8.8 shall prohibit the Selling Companies, or their affiliates, from acquiring a
Buyer Competitive Business as an incidental part of an acquisition (by joint
venture, merger or other) of the assets of, or the majority of voting interests
in, another Person (a "Target Business") if the worldwide sales of the Target
Business from the Buyer Competitive Business are not in excess of 30% of the
worldwide sales of the Target Business in the fiscal year of the Target
Business, for reporting purposes, preceding such acquisition. In the event the
Selling Companies, or their affiliates, acquire a Buyer Competitive Business
pursuant to the second proviso in the preceding sentence and the worldwide sales
of the Buyer Competitive Business are either in excess of 10% of the worldwide
sales of the Target Business or in excess of US $50 million in such fiscal year,
the Selling Companies shall thereafter divest such Buyer Competitive Business
within a reasonable period of time by way of auction or other competitive
bidding process, negotiation, sale or such other manner or divestiture as the
Selling Companies shall deem appropriate.
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(b) For a period of two years after the Closing Date, the
Selling Companies shall not, and shall cause their affiliates not to, solicit to
employ any of the employees of the Dearborn Business so long as they are
employed by the Dearborn Business.
(c) If any provisions contained in this Section shall for any
reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Section, but this Section shall be construed as if such invalid, illegal
or unenforceable provisions had never been contained herein. It is the intention
of the parties that if any of the restrictions or covenants contained herein is
held to cover a geographic area or to be for a length of time which is not
permitted by applicable law, or in any way construed to be too broad or to any
extent invalid, such provision shall not be construed to be null, void and of no
effect, but to the extent such provision would be valid or enforceable under
applicable law, a court of competent jurisdiction shall construe and interpret
or reform this Section to provide for a covenant having the maximum enforceable
geographic area, time period and other provisions (not greater than those
contained herein) as shall be valid and enforceable under such applicable law.
The Selling Companies agree that the Buying Companies shall be entitled, upon a
proper showing, to injunctive relief requiring specific performance of this
Section by the Selling Companies.
8.9 Notification of Certain Matters. Grace shall use reasonable efforts
to give prompt notice to Buyer, and Buyer shall use reasonable efforts to give
prompt notice to Grace of any of the following events that occur between the
date of this Agreement and the Closing as to which they obtain actual knowledge:
(a) the occurrence or non-occurrence of any event, the occurrence or
non-occurrence of which would be reasonably likely to cause (i) any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect or (ii) any covenant, condition or agreement
contained in this Agreement not to be complied with or satisfied in any material
respect, and (b) any failure of the Selling Companies or the Buying Companies,
as the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder in any material
respect; provided, however, that the delivery of any notice pursuant to
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this Section 8.9 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice. In addition, the Selling Companies
will use reasonable efforts to promptly supplement or amend the Schedules with
respect to any matter that they obtain actual knowledge of, hereafter arising
which, if existing or occurring at the date of this Agreement, would have been
required to be set forth or described in the attached Schedules. No supplement
or amendment of the attached Schedules made pursuant to this Section 8.9 shall
be deemed to cure any breach of any representation or warranty made in this
Agreement or limit in any way the purchase price adjustment set forth in Section
4.B.
8.10 Resignations. At the Closing, Grace will deliver to Buyer, the
resignations (effective on or prior to the Closing Date) of all directors of the
Transferred Companies whose resignations Buyer has requested, provided that
Buyer has given Grace adequate time prior to the Closing Date to obtain the
same.
8.11 Confidentiality Agreements. Grace hereby represents and warrants
that it has entered into confidentiality agreements with certain third parties
that expressed an interest in acquiring the Dearborn Business and that were
subsequently permitted access to confidential information of the Dearborn
Business and that each such agreement is now and will remain in full force and
effect as of the date hereof and as of the Closing Date. At the Closing, Grace
shall assign such confidentiality agreements to Buyer.
8.12 Work's Council. Prior to the Closing, Grace shall provide to
Buyer a schedule setting forth all jurisdictions in which the Dearborn Business
is conducted in which a work's council is present.
ARTICLE 9
CONDUCT OF BUSINESS PRIOR TO THE CLOSING
Except as otherwise consented to in writing by Buyer which consent
shall not be unreasonably withheld or delayed or as otherwise specifically
provided in this Agreement, from the date of this Agreement until the Closing:
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9.1 Operation in Ordinary Course. The Selling Companies shall, and
shall cause the Transferred Companies (and, to the extent the Selling Companies
have the right to do so, the Transferred Joint Ventures) to, conduct the
Dearborn Business only in the ordinary course of business, consistent with past
practice and shall use their respective reasonable efforts to preserve intact
the business organization of the Dearborn Business and keep available the
services of the officers and employees of the Dearborn Business.
9.2 Disposition of Assets. The Selling Companies shall not, and shall
not permit the Transferred Companies (and, to the extent the Selling Companies
have the right to do so, the Transferred Joint Ventures) to (a) permit or allow
any of the assets (other than any of the Total Excluded Assets) of the Dearborn
Business to be subjected to any Liens that shall survive the Closing and that
would reasonably be expected to have a Material Adverse Effect or (b) sell,
lease (as lessor), transfer, license (as licensor), or otherwise dispose of, any
capital asset of the Dearborn Business with a book value of US $50,000 or more
(other than any of the Total Excluded Assets), unless such disposition is
reflected in the 1996 budget for the Dearborn Business.
9.3 Material Agreements. The Selling Companies shall not, and shall not
permit the Transferred Companies (and, to the extent the Selling Companies have
the right to do so, the Transferred Joint Ventures) to, in connection with the
Dearborn Business, (a) borrow any money or enter into any loan or credit
agreement under which borrowings would be included in the Total Dearborn
Liabilities or in the liabilities of the Transferred Companies or the
Transferred Joint Ventures in the amount of US $50,000 or more, other than any
agreement or arrangement maintained by or in conjunction with other members of
the Grace Group or arrangements with suppliers for customary credit terms made
in the ordinary course of business consistent with past practice, (b) amend or
terminate any Material Contract other than in the ordinary course of business
consistent with past practice, (c) dispose of, waive or permit to lapse any
claims and rights under Material Contracts with an aggregate value in excess of
US $100,000 other than in the ordinary course of business consistent with past
practice, (d) make any announcement or proposal concerning, or grant any general
increase in salary that would affect the
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Executives other than in the ordinary course of business (unless such
announcement, proposal or grant had been approved by Grace management prior to
the date of this Agreement), (e) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, contingent or otherwise) relating
to the Dearborn Business other than the payment, discharge or satisfaction in
the ordinary course of business and consistent with past practice of liabilities
and obligations reflected or reserved against in the Dearborn Financial
Statements or incurred in the ordinary course of business and consistent with
past practice since December 31, 1995, (f) (Intentionally Omitted), (g) to the
extent the same would have a Material Adverse Effect, dispose of or permit to
lapse any rights to the use of any Intellectual Property, or disclose to any
Person (other than representatives of Buyer) any trade secret, formula, process
or know-how not theretofore a matter of public knowledge, other than in the
ordinary course of business, (h) make any general change in the credit or
warranty terms extended to new or existing customers other than in the ordinary
course of business, (i) enter into any lease of real or personal property
(whether as lessor or lessee) involving annual rental payments in excess of US
$100,000, (j) enter into any contract for the purchase or sale, or the exchange
or storage, of inventory or supplies or for lease of any storage facilities
owned by or under lease to the Dearborn Business, as the case may be, involving
annual payments in excess of US $100,000, other than in the ordinary course of
business, (k) enter into any contract or agreement under which it is reasonably
expected that the Dearborn Business will (i) make expenditures of more than US
$500,000 per year for the purchase of raw materials or supplies, or (ii) obtain
receipts of more than US $500,000 per year for the sale of its products and
services, or (iii) make expenditures or obtain receipts of more than US $200,000
per year for any purpose other than the purchase of raw materials or supplies or
the sale of its products and services, (l) authorize any new capital
expenditures other than those contemplated by the accumulated monthly 1996
budget for the Dearborn Business, which individually is in excess of US $100,000
or, in the aggregate, are in excess of US $250,000, (m) split, combine or
reclassify any shares of capital stock or partnership interests of the
Transferred Companies (except for Dearborn Sweden), declare, set aside or pay
any dividend or make any other distribution whether in cash, stock, or property
or any combination thereof in respect of such capital stock or
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partnership interests, or (n) agree, whether in writing or otherwise, to take
any action prohibited by this Section 9.3.
9.4 Relations with Customers and Suppliers. The Selling Companies
shall, and shall cause the Transferred Companies (and, to the extent the Selling
Companies have the right to do so, the Transferred Joint Ventures) to, use
reasonable efforts to preserve the Dearborn Business's relations with customers
and suppliers, licensors, licensees, contractors, distributors and others having
business relations with the Dearborn Business.
9.5 Satisfaction of Debt. Immediately prior to the Closing, Grace shall
cause the Transferred Companies to satisfy and discharge all short-term
borrowings and long-term debt, unless otherwise consented to in writing by
Buyer.
ARTICLE 10
CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF THE BUYING COMPANIES
All obligations of the Buying Companies under this Agreement are
subject, at Buyer's option, to the fulfillment prior to or at the Closing, of
each of the following conditions, unless waived in writing by Buyer:
10.1 Intentionally Omitted.
10.2 Performance of Covenants and Agreements. Grace and the other
Selling Companies shall have in all material respects performed or complied with
all of the covenants and agreements required to be performed or complied with by
them at or prior to the Closing pursuant to this Agreement.
10.3 Hart-Scott-Rodino Act and Other Governmental Approvals.
(a) All waiting periods under the HSR Act applicable to the
transactions contemplated by this Agreement shall have expired, by passage of
time or by valid early termination by the FTC or the DOJ.
(b) All consents and approvals of non-U.S.
Governmental Authorities with respect to antitrust, busi-
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ness combination or foreign investment filings, laws or regulations shall have
been obtained.
10.4 Certificate of Grace.
(a) Grace shall have delivered to Buyer a certificate of
Grace, dated the Closing Date, signed by a Vice President or more senior officer
of Grace certifying that (except as specifically set forth in such certificate):
(i) each and every representation and warranty of Grace under this Agreement
that is qualified as to materiality is true and accurate and each of the
representations and warranties of the Selling Companies under this Agreement
that are not so qualified is true and accurate in all material respects as of
the Closing and (ii) Grace and the other Selling Companies have in all material
respects performed or complied with at or prior to the Closing all of the
covenants and agreements required to be performed by them at or prior to the
Closing pursuant to this Agreement.
(b) If the certificate referred to in Section 10.4(a) sets
forth any exceptions to the statement set forth in clause (ii) of such Section,
the condition precedent to the obligations of the Buying Companies under Section
10.2 shall not have been fulfilled.
10.5 Litigation. On the Closing Date, there shall not be in effect or
threatened any order, decree or ruling or other judicial or governmental action
restraining, enjoining or otherwise prohibiting the transactions contemplated
hereby.
ARTICLE 11
CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF THE SELLING COMPANIES
All obligations of the Selling Companies under this Agreement are
subject, at Grace's option, to the fulfillment prior to or at the Closing, of
each of the following conditions unless either waived in writing by Seller:
11.1 Intentionally Omitted.
11.2 Performance of Covenants and Agreements. The
Buying Companies shall have in all material respects per-
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formed or complied with all of the covenants and agreements required to be
performed or complied with by them at or prior to the Closing pursuant to this
Agreement.
11.3 Hart-Scott-Rodino Act and Other Governmental Ap-
provals.
(a) All waiting periods under the HSR Act applicable to the
transactions contemplated by this Agreement shall have expired, by passage of
time or by valid early termination by the FTC or the DOJ.
(b) All consents and approvals of non-U.S. Governmental
Authorities with respect to antitrust, business combination or foreign
investment filings, laws or regulations shall have been obtained.
11.4 Intentionally Omitted.
11.5 Litigation. On the Closing Date, there shall not be in effect or
threatened any order, decree or ruling or other judicial or governmental action
restraining, enjoining or otherwise prohibiting the transactions contemplated
hereby.
11.6 Certificate of Buyer.
(a) Buyer shall have delivered to Seller a certificate of
Buyer, dated the Closing Date, signed by a Vice President or more senior officer
of Buyer, certifying that: (i) each and every representation and warranty of
Buyer under this Agreement that is qualified as to materiality is true and
accurate and each of the representations and warranties of Buyer under this
Agreement that are not so qualified, is true and accurate in all material
respects, as of the Closing; and (ii) Buyer and the other Buying Companies have
in all material respects performed or complied with at or prior to the Closing
all of the covenants and agreements required to be performed or complied with by
them at or prior to the Closing pursuant to this Agreement.
(b) If the certificate referred to in Section 11.6(a) sets
forth any exceptions to the statement set forth in clause (ii) of such Section,
the conditions precedent to the obligations of the Selling Companies under
Section 11.2 shall not have been fulfilled.
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ARTICLE 12
EMPLOYEE MATTERS
12.1 Employees of Transferred Companies and Transferred Joint Ventures.
Buyer acknowledges that the job position and terms and conditions of employment
of all active and inactive employees of the Transferred Companies and
Transferred Joint Ventures shall not be affected by the occurrence of the
Closing, except with respect to employee benefit plans as otherwise may be
provided in the Employee Benefits Agreement.
12.2 Current, Continued and Transitional Service Employees.
(a) On the Closing Date, the following individuals shall cease
to be employees of the Grace Group: (i) each employee of the Grace Group (other
than the Transferred Companies or Transferred Joint Ventures) who is employed
exclusively in the Dearborn Business, (ii) each employee of the Grace Group
(other than the Transferred Companies or Transferred Joint Ventures) who
performs substantial services for the Dearborn Business and is designated by
Grace as an employee who is to be transferred with the Dearborn Business, and
(iii) each employee who replaces any employee described in clauses (i) and (ii).
All employees described in clauses (i) and (ii), as of December 31, 1995, are
listed on the Schedule to this Section. All employees described in clauses (i),
(ii) and (iii) are referred to as "Current Employees".
(b) Each Current Employee (excluding any Current Employee who
is on long-term disability on the Closing Date) who accepts an offer of
employment made by a member of the Buyer Group in accordance with Section 12.3
shall become an employee of such member of the Buyer Group effective on the
Closing Date; and all such Current Employees are referred to as "Continued
Employees".
(c) Each Transitional Services Employee shall cease to be an
employee of the Grace Group on a date to be established by Grace for each
Transitional Services Employee; provided that, with respect to Transitional
Services Employees fully dedicated to performing services for the Dearborn
Business, cessation of each such employee's employment with the Grace Group
shall be by mutual agreement
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between Buyer and Grace. Any member of the Buyer Group may offer employment to
any Transitional Services Employee to commence on or after the date such
employee ceases to be an employee of the Grace Group.
12.3 Positions Offered to Current Employees.
(a) With respect to each Current Employee, the Buying
Companies shall either offer the Current Employee employment with a member of
the Buyer Group to commence on the Closing Date or the Current Employee shall be
eligible for severance benefits as an employee described in Section 12.6(a)(i).
(b) With respect to each Current Employee who is offered
employment with a member of the Buyer Group in accordance with Section 12.3(a),
either (A) the position offered by the Buying Companies: (i) shall be for a job
that is equivalent (including with respect to his or her level of responsibility
and authority) to the Current Employee's job with the Dearborn Business as of
the Closing, (ii) shall be at no reduction in base salary, wages, or commission
or sales incentive award levels effective as of the Closing, (iii) shall not
change the location of the Current Employee's principal place of work to one
that is an unreasonable commuting distance from his or her residence, and (iv)
shall provide employee benefit plan coverages in accordance with the provisions
of the Employee Benefits Agreement or (B) the position offered by the Buying
Companies shall be on terms other than those set forth in (A) above, and, in
such case, if the Current Employee does not accept that offer, he or she shall
be eligible for severance benefits to the same extent as an employee described
in Section 12.6(a)(ii) who voluntarily terminates employment with the Buyer
Group.
(c) The Selling Companies have not made any representation
regarding which, if any, (i) Current Employees or Transitional Services
Employees will accept offers of employment with the Buyer Group, or (ii)
employees of the Transferred Companies and Transferred Joint Ventures will
continue such employment after the Closing.
12.4 Employee Benefit Plans. As of the Closing Date, the Continued
Employees and the employees of the Transferred Companies and the Transferred
Joint Ventures who participated in the employee benefit plans or arrangements
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maintained by the Grace Group shall cease to participate in those plans or
arrangements and shall commence participation in employee benefit plans or
arrangements established or maintained by the Buyer Group, in accordance with
the Employee Benefits Agreement. Notwithstanding the foregoing, the Grace Group
and the Buyer Group may agree that certain such employees may continue to
participate in employee benefit plans or arrangements maintained by the Grace
Group for a specific period after the Closing Date.
12.5 Vacation. Effective as of the Closing Date, the Buyer Group shall
assume all liability of the Grace Group with respect to vacation and leave of
absence for each Continued Dearborn Business Employee. With respect to each
Continued Dearborn Business Employee who is credited with vacation and/or leave
of absence earned on a calendar year basis, Buyer shall continue to apply the
vacation and leave of absence policy and/or practice (whether or not legally
required) applicable to such Continued Dearborn Business Employee the day before
the Closing Date for at least the remainder of the calendar year in which the
Closing occurs and the following calendar year; so that each such Continued
Dearborn Business Employee shall be entitled to use any vacation days or leave
of absence time, and/or receive any pay related thereto, to which he or she
would otherwise be entitled for such calendar years applicable the day before
the Closing Date. With respect to any Continued Dearborn Business Employee who
is credited with vacation days or leave of absence time (and pay related
thereto) based on the 12-month period commencing on his or her employment
anniversary date (an "Anniversary Vacation Period"), and not based on a calendar
year, Buyer shall continue to apply the vacation and leave of absence policy
and/or practice (whether or not legally required) applicable to such Continued
Dearborn Business Employee the day before the Closing for least the Anniversary
Vacation Period during which the Closing occurs and the following Anniversary
Vacation Period; so that each such Continued Dearborn Business Employee shall be
entitled to use any vacation days or leave of absence time, and/or receive any
pay related thereto, to which he or she would otherwise be entitled for such
Anniversary Vacation Period(s) applicable the day before the Closing Date.
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12.6 Severance Arrangements.
(a) Buyer acknowledges that:
(i) a severance and retention arrangement
has been adopted by the Grace Group (the "Grace Severance Arrangement"), as
described on the Schedule to this Section that provides severance pay and other
benefits to each Dearborn Business Employee (except for an employee of any
Transferred Joint Venture) who is deemed by Grace to be a regular salaried
employee of the Grace Group (a "Salaried Dearborn Business Employee") and who
Grace determines has become unemployed as of the Closing Date; or who Grace
determines has been terminated as of an earlier date as a direct result of the
divestment of the Dearborn Business, but only if consented to by Buyer.
(ii) the severance and other benefits under
the Grace Severance Arrangement shall also apply to each Salaried Dearborn
Business Employee who: (A) becomes an employee of the Buyer Group but who is
subsequently involuntarily terminated from employment with the Buyer Group
within 6 months after the Closing Date due to plant consolidation, closing or
relocation, or other circumstances that are not directly related to the
employee's performance, (B) becomes an employee of the Buyer Group but
voluntarily terminates his or her employment within 6 months after the Closing
Date as a result of an unreasonable change in job duties, a decrease in
compensation or a change in work location that results in an unreasonable
commuting distance from the employee's existing residence, or (C) on the Closing
Date or on any date subsequent thereto is absent from work due to disability or
leave of absence (whether or not he or she is receiving workers' compensation
payments), and who recovers from such disability and requests reinstatement to
active employment status within 6 months of the Closing Date, but is denied
reinstatement by any member of the Buyer Group;
(iii) certain Dearborn Business Employees
who are not eligible for severance under the Grace Severance Arrangement may be
entitled to severance benefits under local law as a result of the transactions
contemplated by this Agreement, even if they commence employment with the Buyer
Group, refuse to accept an offer of employment with the Buyer Group or resign
their employment with the Grace Group; and
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(iv) Transitional Services Employees shall
be eligible for severance under various plans, programs, policies and practices
of the Grace Group upon termination of employment with the Grace Group (but
shall not be eligible to participate in the Grace Severance Arrangement).
(b) Buyer shall reimburse Grace (or any other member of the
Grace Group designated by Grace) for the cost incurred in connection with
severance pay and/or other severance benefits (i) under the Grace Severance
Arrangement with respect to Dearborn Business Employees who become entitled to
severance benefits under circumstances described in Section 12.3(a) or (b) or
Section 12.6(a)(i) or (ii), and (ii) under any local law that requires severance
to be paid to Dearborn Business Employees as a result of the transactions
contemplated by this Agreement (as described above in Section 12.6(a)(iii)).
Buyer shall make such reimbursement due pursuant to this Section 12.6(b) within
30 days after receipt of a written demand from Grace specifying the amount of
the costs incurred during a specific period and appropriate supporting
documentation.
(c) Buyer shall pay Grace (and/or other members of the Grace
Group designated by Grace) a total of US $10,000,000 in a manner described in
the transitional services agreement(s) that shall be entered into between the
Grace Group and the Buyer Group, which shall be regarded as compensation for
severance benefits that will be (or may be) provided by the Grace Group under
any plan, program, policy or practice of the Grace Group to Transitional
Services Employees who are terminated by the Grace Group. With respect to any
Transitional Services Employee who is to be terminated by the Grace Group but
who is transferred to, or hired by, the Buyer Group, then the Grace Group shall
credit to Buyer (or any other member of the Buyer Group designated by Buyer) an
amount equal to the cost of the severance benefits that would have been provided
to such employee if the employee was terminated by the Grace Group and not
transferred to, or hired by, the Buyer Group; but only if under applicable law
the Grace Group is not required to provide severance benefits to such employee.
12.7 Post-Closing Severance Benefits For Salaried
Dearborn Business Employees.
(a) Effective 6 months after the Closing Date,
Buyer shall cause each Salaried Dearborn Business Employee
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then employed by the Buyer Group to be covered by a severance plan or program
that shall remain in effect for a period of not less than 18 months thereafter
(the "Buyer's Severance Arrangement"). The Buyer's Severance Arrangement shall
provide for the following: (i) severance payments equal to the payments that
such employees would have been entitled to under the terms of the Grace
Severance Arrangement, based upon an aggregation of service with the Grace Group
up to the Closing Date and service with the Buyer Group on and after the Closing
Date, (ii) payments for unused but accrued vacation as of the date of the
employee's termination, (iii) outplacement services and (iv) with respect to a
Salaried Dearborn Business Employee who is employed in the United States,
continuation of coverage under the Buyer's Medical Plans (as defined in the
Employee Benefits Agreement) for the shortest of the following periods: (i) the
period ending 4 months after the employee's last date of employment with the
Buyer Group, (ii) the period that installment severance payments are made to the
employee or (iii) the period that ends on the date that the employee becomes
eligible for coverage under another group medical plan; such continuation
coverage shall be under the same terms and conditions of Buyer's Medical Plans
applicable to such employee the day before his or her termination. The costs
that such employee will incur for coverage under the Buyer's Medical Plans
during the period that such employee is entitled to coverage pursuant to the
immediately preceding sentence shall not exceed the cost of coverage under
Buyer's Medical Plans applicable to active employees who participate therein. In
addition, such period of coverage shall be considered to be part of the health
care continuation period required to be provided to the employee under the
applicable provisions of the Consolidated Omnibus Budget Reconciliation Act of
1985. The Buyer's Severance Arrangement shall permit each eligible former
Salaried Dearborn Business Employee who is employed in the United States to
elect to receive severance payments in a lump sum or in installment payments in
the same manner as provided by the Grace Severance Arrangement.
(b) The provisions of Section 12.7(a) shall apply to each
Salaried Dearborn Business Employee who is covered under the Buyer's Severance
Arrangement and who: (i) is subsequently involuntarily terminated from
employment by the Buyer Group during the period that the Buyer's Severance
Arrangement is required to remain in effect, due to plant consolidation, closing
or relocation, or other
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circumstances that are not directly related to the employee's performance; (ii)
voluntarily terminates his or her employment during the period that the Buyer's
Severance Arrangement is required to remain in effect, as a result of the
occurrence, without such employee's consent (which consent may not be
subsequently revoked), of an unreasonable change in job duties, a change in work
location that results in an unreasonable commuting distance from such employee's
existing residence or a decrease in such employee's aggregate compensation such
that the employee's resulting aggregate annual compensation will equal less than
85% of the aggregate compensation received by such employee for the 12-month
period ending on the day before the Closing Date or (iii) on the Closing Date or
on any date subsequent thereto, is absent from work due to disability or leave
of absence (whether or not he or she is receiving worker's compensation
payments), and who recovers from such disability (if applicable) and requests
reinstatement to active employment status during the period that the Buyer's
Severance Arrangement is required to remain in effect, but is denied
reinstatement by any member of the Buyer Group.
(c) Buyer shall cause the plan document and the summary plan
description for the Buyer's Severance Arrangement to include a provision stating
that the Buyer's Severance Arrangement may not be terminated or amended in a
manner adverse to the covered employees prior to the date that is 18 months
following the Buyer's Severance Arrangement's effective date. Buyer shall cause
the summary plan description for the Buyer's Severance Arrangement to be
distributed to the Salaried Dearborn Business Employees within thirty days after
the Closing Date.
(d) After the Buyer's Severance Arrangement has been in effect
for the required 18-month period, Buyer may terminate or revise the Buyer's
Severance Arrangement, to the extent permitted by applicable law. Salaried
Dearborn Business Employees shall receive credit for prior service with the
Grace Group for the purposes of applying any revised policy.
12.8 Executive Compensation. As of the Closing Date, the Continued
Dearborn Business Employees who participated in the Grace Group's executive
compensation plans or ar- rangements shall commence participation in executive
com- pensation plans or arrangements maintained by the Buyer
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Group, which provide coverage and benefits to such persons which are, in the
aggregate, not less favorable than those provided to such employees immediately
prior to the Closing Date.
12.9 Inactive Current Employees. This Agreement shall not obligate the
Buyer Group to employ any Dearborn Business Employee who is classified by the
Grace Group as being on long-term disability leave as of the Closing Date.
Notwithstanding any other provision of this Agreement to the contrary, those
Dearborn Business Employees who have been classified by the Grace Group as being
on layoff, short-term disability or leave of absence (whether paid or unpaid or
as a result of a workers' compensation claim) as of the Closing shall continue
such status with the appropriate member of the Buyer Group after the Closing
Date.
12.10 Expatriate Employees. The Dearborn Business Employees listed in
the Schedule to this Section are referred to as the "Expatriate Employees." Each
Expatriate Employee has relocated from the country where he or she was a citizen
or resident, and is a party to one of the agreements listed in the Schedule to
this Section regarding relocation payments, home leave, repatriation rights and
other matters (the "Expatriate Agreements"). Grace has delivered or made
available to Buyer complete copies of the written Expatriate Agreements and a
written summary of all other Expatriate Agreements, as currently in effect. At
the Closing Date, the Buyer Group shall assume (i) all obligations of the Grace
Group under the Expatriate Agreements with respect to each Expatriate Employee
who accepts employment with the Buyer Group, and (ii) all severance and
repatriation obligations of the Grace Group under the Expatriate Agreements
related to the termination of each Expatriate Employee who does not accept
employment with the Buyer Group.
12.11 Terms of Employment. As to terms and conditions of employment of
the Continued Dearborn Business Employees not described in this Article, and
subject to the Employee Benefits Agreement, from and after the Closing, the
Continued Dearborn Business Employees: (i) shall be treated in a manner similar
to the other similarly situated employees of the Buyer Group, (ii) shall be
entitled to participate on the same basis as such other employees in all job
training, career development and educational programs of the Buyer Group, and
(iii) shall be entitled to fair and equitable
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consideration together with such other employees in connection with any
management or executive job opportunities or any other promotional opportunities
with the Buyer Group.
12.12 Recognition of Seniority. The Buyer Group shall recognize
continuous service with the Grace Group (including predecessor employers to the
extent such service is recognized by the Grace Group) for the purpose of
determining seniority as used for the determination of service awards, severance
benefits, vacations, sick leave and other terms and conditions of employment
related to seniority.
12.13 Employee Information Sharing. After the Closing Date, the Buying
Companies shall, and shall cause the Transferred Companies (and, to the extent
Buyer has the right to do so, the Transferred Joint Ventures) to, provide to the
Grace Group, and the Selling Companies shall, and shall cause the other members
of the Grace Group to, provide to the Buyer Group, on a continuing basis at no
cost to the recipient, such information regarding persons who were employees of
the Dearborn Business under the Grace Group's ownership, as may be reasonably
requested. This Section shall not compel any person to maintain records beyond
the periods specified in Sections 15.2 and 15.3.
12.14 Transfer of Employees of the Brazilian Business. Any other
provision of this Agreement to the contrary notwithstanding, at the Closing
Date, all Current Employees who are employed in Brazil shall be transferred by
Grace's Brazilian Subsidiary to Buyer's entity which will carry out the Dearborn
Business in Brazil, by means of a change in current employment agreements and
without termination thereof.
ARTICLE 13
TERMINATION
13.1 Rights to Terminate.
(a) This Agreement may be terminated at any time
prior to the Closing by written agreement of Grace and
Buyer.
(b) [Intentionally Omitted.]
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(c) If the Closing shall not have taken place on or before
December 15, 1996, either Grace or Buyer may terminate this Agreement at any
time thereafter by giving notice of such termination to the other in the manner
provided in Section 18.1; provided, however, that (i) Grace may not terminate
this Agreement pursuant to this Section 13.1(c) if the Closing could take place
in the event Grace made an election to close pursuant to Section 2.5 hereof and
(ii) in the event of a change of control transaction affecting a party, such
party shall not have the right to terminate this Agreement pursuant to this
Section 13.1(c) if the failure to consummate the Closing by such date shall be
due to the failure of the party seeking to terminate this Agreement to have
fulfilled any of its obligations under this Agreement.
13.2 Consequences of Termination.
(a) In the event of a termination of this Agreement, in
accordance with Section 13.1, this Agreement shall thereafter become void and
have no effect; provided, however, that the termination of this Agreement shall
not affect the rights of any Buying Company or Selling Company against the other
for any breach of this Agreement.
(b) The obligations of the parties under Sections 17.1 and
17.2 shall survive any termination of this Agreement.
ARTICLE 14
INDEMNIFICATION
14.1 Definitions. As used in this Article:
(a) "Damages" means any and all assessments, penalties, fines,
damages, judgments, liabilities, losses or costs (including reasonable
Litigation Expenses incident to Third Party Claims, but excluding Litigation
Expenses incident to Direct Claims).
(b) "Direct Claims" means claims other than
Third Party Claims. "Direct Claim" means one of the Direct Claims.
(c) "Litigation Expenses" means attorneys' fees
and other costs and expenses incident to proceedings or
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investigations with respect to, or the prosecution or defense of, any Direct
Claim or Third Party Claim.
(d) "Third Party Claims" means any and all claims, demands,
suits, actions or proceedings by any person or entity, other than members of the
Buyer Group or the Grace Group, that could give rise to a right of
indemnification under this Article. "Third Party Claim" means one of the Third
Party Claims.
14.2 Sellers' Indemnification.
(a) Subject to the terms and limitations of this Article,
Grace shall indemnify and hold harmless the Buying Companies, their Subsidiaries
(including, after the Closing, the Transferred Companies and the Transferred
Joint Ventures), directors, officers and employees (the "Buyer Indemnified
Group"), as the case may be, from and against all Damages incurred by any member
of the Buyer Indemnified Group arising out of, incurred in connection with or
relating to (i) any breach by or non-performance of any Selling Company of any
of its covenants or agreements under this Agreement or any of the other
Transaction Documents (other than the Tax Procedures Agreement), (ii) any breach
of or inaccuracy in any representation or warranty of Grace set forth in Article
5, (iii) any of the Total Excluded Liabilities, (iv) Undisclosed Employee
Liabilities or (v) Undisclosed Product Liabilities.
(b) The representations and warranties of Grace set forth in
Article 5 shall survive the Closing. The representations and warranties set
forth in Section 5.5 through the end of Article 5 (except for the representation
and warranty contained in the third sentence of Section 5.5) shall expire and be
of no further force and effect 18 months after the Closing Date, except with
respect to claims Buyer has previously asserted against Grace in writing,
setting forth with reasonable specificity the nature of such claims. Neither the
period of survival nor the liability of Grace with respect to Grace's
representations and warranties shall be reduced by any investigation made at any
time by or on behalf of Buyer.
14.2A Environmental Indemnification.
(a) Notwithstanding any other provisions of this
Agreement, Grace shall indemnify and hold harmless the
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Buyer Indemnified Group from and against all Environmental Costs incurred by any
member of the Buyer Indemnified Group arising out of, incurred in connection
with or relating to:
(i) On-Site Matters. (A) To the extent
required by Environmental Law in effect as of the Closing Date or by a
Governmental Authority implementing such law, Cleanup of Hazardous Substances
released into the environment prior to the Closing Date onto or under any
properties or facilities being transferred to the Buyer Group pursuant to this
Agreement and onto or under adjacent property to the extent such Hazardous
Substances have migrated to such adjacent property ("On-Site Property");
(B) Toxic Tort Claims, Chromium Claims
and Natural Resource Damage Claims relating to On-Site Properties, provided that
indemnification for Natural Resource Damage Claims (including such Natural
Resource Damage Claims that relate to chromium compounds and salts thereof) are
limited to claims arising under Environmental Laws that are in effect as of the
Closing Date;
(ii) Formerly-Owned Property Matters.
(A) Cleanup of real property formerly owned by one of the Selling Companies,
Transferred Companies or Transferred Joint Ventures as part of the Dearborn
Business ("Formerly-Owned Property"), except indemnification shall not be
available for Hazardous Substances released or disposed of at such real property
by a member of the Buyer Group, provided that this exception does not apply to
such release or disposal by the Transferred Companies or Transferred Joint
Ventures prior to the Closing Date;
(B) Toxic Tort Claims, Chromium Claims
and Natural Resource Damage Claims relating to
Formerly-Owned Properties;
(iii) Off-Site Matters. (A) Cleanup of
Hazardous Substances released at any location (other than locations covered by
subsections (a)(i), (ii), and (iv) herein) ("Off-Site Properties") if such
substances were generated, used, stored, treated, transported, disposed of, or
released by or on behalf of the Dearborn Business or any predecessor thereto
prior to the Closing Date, except that Grace shall not be obligated to provide
indemnification pursuant to this subsection for the Cleanup of Hazardous
Substances which were disposed of at such locations by any
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member of the Buyer Group, provided that this exception does not apply to such
disposal by the Transferred Companies or Transferred Joint Ventures prior to the
Closing Date;
(B) Toxic Tort Claims, Chromium Claims
and Natural Resource Damage Claims relating to Off-Site
Properties;
(iv) Customer Site Matters. (A) Cleanup of
Hazardous Substances, including Hazardous Substances contained in products,
purchased from or supplied by one of the Selling Companies, Transferred
Companies or Transferred Joint Ventures of the Dearborn Business (or any
predecessor thereto) prior to the Closing Date, which were released into the
environment onto or under any property owned or operated by the current or
former customers of the Dearborn Business (including, without limitation,
storage tanks owned or operated by the Dearborn Business or any predecessor
thereto at such locations) or onto or under adjacent property to the extent such
Hazardous Substances have migrated to such adjacent property ("Customer Sites"),
or which were disposed of or transported from Customer Sites ("Customer Disposal
Sites");
(B) Toxic Tort Claims, Chromium Claims
and Natural Resource Damage Claims relating to Customer
Sites or Customer Disposal Sites; or
(v) Breach of Representations and Warran-
ties. Breach of or inaccuracy in any of the representa-
tions or warranties stated in Section 5.14.
(b) Indemnification shall be available under this Section
14.2A only with respect to those claims as to which Claimant has provided a
written notice to Grace ("Environmental Notice") during the periods specified in
this subsection (b). Such Environmental Notice must include, based on reasonably
available information, the following: (i) location; (ii) types of Hazardous
Substances; (iii) the extent of any contamination, if known; (iv) the impacted
media, if known; and (v) a copy of any notices filed with or received from any
Governmental Authority or other person, or if no such notice has been filed or
received, the basis upon which Claimant seeks indemnification. Such
Environmental Notice must be provided prior to the fifth anniversary of the
Closing Date with respect to
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Cleanup, Toxic Tort Claims and Natural Resource Damage Claims relating to
On-Site Properties, Customer Sites and Customer Disposal Sites, prior to the
expiration of the 18- month period following the Closing Date with respect to
claims covered by Section 14.2A(a)(v), or at any time for any other claim
covered by this Section 14.2A.
(c) Except as otherwise provided in Section 14.2A(e), the
Buyer Indemnified Group shall not be eligible for indemnification for claims
covered by Section 14.2A(a)(i), except for claims for which the Environmental
Costs incurred by Claimant exceeds US $50,000 ("Covered On-Site Claims"). Grace
shall not be obligated to reimburse the Buyer Indemnified Group unless and until
the aggregate Environmental Costs of such Covered On-Site Claims exceeds US
$6,000,000 (the "Environmental Deductible"), and then only with respect to the
excess of such aggregate amount. Once the Environmental Deductible has been
exceeded, Grace shall reimburse the Buyer Indemnified Group for each Covered
On-Site Claim, except for Chromium Claims, in accordance with the following and
based on the year in which the Environmental Notice of such claim was filed:
(i) Grace shall reimburse 80% of all Envi-
ronmental Costs relating to claims made before the first
anniversary of the Closing Date;
(ii) Grace shall reimburse 60% of all Envi-
ronmental Costs relating to claims made on or after the
first but before the second anniversary of the Closing
Date;
(iii) Grace shall reimburse 60% of all
Environmental Costs relating to claims made on or after the second anniversary
but before the third anniversary of the Closing Date;
(iv) Grace shall reimburse 40% of all Envi-
ronmental Costs relating to claims made on or after the
third anniversary but before the fourth anniversary of the
Closing Date;
(v) Grace shall reimburse 20% of all Envi-
ronmental Costs relating to claims made on or after the fourth anniversary but
before the fifth anniversary of the Closing Date.
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For claims filed before the first anniversary of the Closing Date, this
subsection shall apply to all Covered On-Site Claims even if it is unclear
whether the release occurred prior to or subsequent to the Closing Date, except
that Buyer shall be solely responsible for releases that are clearly identified
as having occurred subsequent to the Closing Date.
As to Chromium Claims that are also Covered On-Site Claims, once the
Environmental Deductible has been exceeded, Grace shall reimburse the Buyer
Indemnified Group for 90% of all Environmental Costs related to such claims,
without respect to when the Environmental Notice for such claim was submitted.
The Buyer Indemnified Group shall be responsible for their allocation
of Environmental Costs as set forth above regarding each claim.
(d) (i) Indemnification by Grace for any breach
of Section 5.14 shall be as follows:
(A) any Environmental Costs related to
Cleanup at or related to On-Site Property shall be allocat-
ed in accordance with Section 14.2A(c) above;
(B) limited to fines, penalties, legal
expenses and any other costs of defending any litigation or administrative
proceeding for such breaches related to noncompliance with Environmental Law,
except for matters otherwise covered by subsection (d)(i)(A) above;
(C) any Environmental Costs related to
Section 14.2A(a)(iv) shall be allocated in accordance with Section 14.2A(f).
(ii) With regard to subsection (d)(i)(B) and
all other claims related to any other breach of Section 5.14 not referred to in
subsection(d)(i)(A) or (C) above, the Buyer Indemnified Group shall not be
eligible for indemnification with respect to the breach of any representation of
Section 5.14(b)(i), (ii), or (iii) unless and until the aggregate amount of all
such Buyer Indemnified Group's indemnified costs exceeds US $1,000,000, and then
only with respect to the excess of such aggregate amount; except that such
limits shall not apply to breaches of
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environmental representations that relate to matters covered by Section
14.2A(a)(ii) and (iii).
(e) Notwithstanding the limitations set forth in subsection
14.2A(c) above, to the extent that any On-Site Property becomes listed on the
NPL solely as a result of the release of Hazardous Substances prior to the
Closing Date, Grace shall have responsibility for 100% of all Environmental
Costs related to the Cleanup on that property commencing on the day the site's
nomination to the NPL is made final by publication in the Federal Register.
Until such time, the allocation set forth in Section 14.2A(c) above shall be
used. Grace, at its option, may assume control of any project for which it has
100% responsibility under this subsection.
(f) The Buyer Indemnified Group shall not be eligible for
indemnification under Section 14.2A(a)(iv), unless and until the aggregate of
all Environmental Costs for which indemnification is sought exceeds US
$10,000,000, and then only with respect to 90% of the excess of such aggregate.
(g) Grace's aggregate indemnity with respect to (i) Cleanup,
Toxic Tort Claims and Natural Resource Damage Claims relating to On-Site
Properties and Customer Sites; (ii) Undisclosed Product Liabilities; and (iii)
Undisclosed Employee Liabilities, shall be limited to 10% of the Total Purchase
Price. This limitation does not apply to Chromium Claims arising at or from any
location or any claims arising under Section 14.2A with respect to
Formerly-Owned Properties or Off-Site Properties.
(h) The dollar thresholds set forth in this Section 14.2A have
been negotiated for the special purpose of the provisions to which they relate,
and are not to be taken as evidence of the level of "materiality" for purposes
of any statutory or common law which may be applicable to the transactions
contemplated by this Agreement under which a level of materiality might be an
issue.
14.3 Buyers' Indemnification.
(a) Subject to the terms and limitations of this Article, the
Buying Companies shall, jointly and severally, indemnify and hold harmless the
Selling Companies, their Subsidiaries, directors, officers and employees (the
"Grace
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Indemnified Group"), as the case may be, from and against all Damages incurred
by any member of the Grace Indemnified Group arising out of, incurred in
connection with or relating to (i) the breach by or non-performance of any
Buying Company, or subsequent to the Closing any Transferred Company or
Transferred Joint Venture, of any of its covenants or agreements under this
Agreement or any of the other Transaction Documents, (ii) any breach of or
inaccuracy in any representation or warranty of Buyer set forth in Article 6,
(iii) the failure of any Transferred Company or Transferred Joint Venture
subsequent to the Closing to perform or fulfill its obligations under any
contract, agreement or obligation for which any member of the Grace Group is or
may be liable, as a guarantor or otherwise, (iv) any of the Total Dearborn
Liabilities, including, without limitation, any liability or obligation relating
to the Dearborn Business or the Total Dearborn Assets based upon or arising
under any Environmental Law, except as may be otherwise provided in this Article
14, (v) the Buyer Group's hiring practices and decisions with respect to the
Dearborn Business (including, but not limited to, any claims by any Current
Employee alleging he or she was not hired or was terminated, on or after the
Closing Date in violation of U.S. or non-U.S. non-discrimination laws), (vi) any
claim concerning any aspect of the employment or termination of employment, at
or after the Closing, of any Continued Dearborn Business Employee, (vii)
(Intentionally Omitted), (viii) any claim made by any Dearborn Business Employee
or any Transitional Services Employee for any severance pay or other severance
benefit, including, but not limited to, any individual who becomes entitled to
such pay or benefits under the Grace Severance Arrangement before, on or after
the Closing Date and any individual who under applicable law or otherwise is
entitled to severance upon dismissal by the Selling Companies after refusing an
offer to become an employee of the Buyer Group, (ix) any change in the
collective organization or joint committees applicable to any Continued Dearborn
Business Employee that occurs at or after the Closing, or applicable to any
Transitional Services Employee who commences employment with any member of the
Buyer Group that occurs on or after the date that such employee commences such
employment; (x) any claim made by any Dearborn Business Employee based on any
agreement between the employee and any member of the Grace Group that was in the
ordinary course of business or (xi) any claim under the U.S. Worker Adjustment
and Retraining Notification Act, 29 U.S.C.ss.ss. 2101 et seq., or any comparable
U.S.,
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state or non-U.S. law arising out of any actions taken by the Buyer Group at or
after the Closing or as a result of the transactions contemplated by this
Agreement.
(b) The representations and warranties of Buyer
set forth in Article 6 shall survive the Closing.
14.4 Limitations.
(a) The Buying Companies and the other members of the Buyer
Group may not assert any claim for indemnification under this Article (a
"Buyers' Claim") with respect to the breach of or inaccuracy in any
representation or warranty in Section 5.5 through Section 5.13 and Section 5.15
through the end of Article 5 unless and until the aggregate amount of all such
Buyers' Claims give rise to Damages that exceed US $10,000,000 and then only
with respect to the excess of such aggregate Buyers' Claims over US $10,000,000;
provided, however, that this Section 14.4 shall not apply to (i) any
indemnification by Grace for any Damages asserted against, imposed upon or
incurred by the breach or inaccuracy in any representations and warranties
contained in Section 5.17 (Brokers).
(b) The dollar thresholds set forth in this Section have been
negotiated for the special purpose of the provision to which they relate, and
are not to be taken as evidence of the level of "materiality" for purposes of
any statutory or common law which may be applicable to the transactions
contemplated by this Agreement under which a level of materiality might be an
issue.
(c) Any payment by Buyer (or a Member of the Buyer Group) or
Grace (or a Member of the Grace Group) under this Article 14 will be treated as
an adjustment to the Total Purchase Price; provided, however, that to the extent
it cannot be so characterized for tax purposes or if such indemnification occurs
after the expiration of the statute of limitations for the 1996 taxable year,
the recipient of any such payment shall be entitled to an additional payment to
cover Taxes on the payment less any allowable Tax deductions attributable to
payment of the indemnified claim.
14.5 Defense of Third Party Claims.
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(a) The Buying Companies shall, and shall cause the other
members of the Buyer Group to, notify Grace in writing promptly after a Third
Party Claim is asserted against or sought to be collected from any member of the
Buyer Group for which the Grace Group may be liable under this Agreement, or
which is to be taken into account for purposes of the dollar thresholds in
Sections 14.2A or 14.4. The Selling Companies shall, and shall cause the other
members of the Grace Group to, notify Buyer in writing promptly after a Third
Party Claim is asserted against or sought to be collected from any member of the
Grace Group for which the Buyer Group may be liable under this Agreement. It
shall be a necessary condition of any claim by any entity for indemnification
under this Agreement with respect to any Third Party Claim, or for such Third
Party Claim to be taken into account for purposes of the dollar thresholds under
Sections 14.2A or 14.4, that the entity seeking indemnification or to have such
claim taken into account (the "Claimant") notify Grace on behalf of the Grace
Group, if the Claimant is a member of the Buyer Group, or Buyer on behalf of the
Buyer Group, if the Claimant is a member of the Grace Group, prior to the time
when the notice recipient's ability to contest the Third Party Claim would be
materially impaired by lack of notice. If a Buyer Group Claimant fails to give
such notice of a Third Party Claim and such Claimant's failure to provide such
notice has materially prejudiced the indemnifying party's ability to defend the
Third Party Claim, then all members of the Buyer Group shall be deemed to have
waived all rights to indemnification with respect to such Third Party Claim. If
a Grace Group Claimant fails to give such notice of a Third Party Claim and such
Claimant's failure to provide such notice has materially prejudiced the
indemnifying party's ability to defend the Third Party Claim, then all members
of the Grace Group shall be deemed to have waived all rights to indemnification
with respect to such Third Party Claim.
(b) Except as otherwise provided in Section 14.5(d), Grace, or
any other member of the Grace Group, may undertake the defense of a Third Party
Claim that the Buyer Group has notified Grace of, by notice to Buyer not later
than 60 calendar days after receipt by Grace of the Buyer Group's notice of the
claim. Failure on the part of the Grace Group to so notify Buyer that it will
undertake such defense shall be deemed to be a waiver of the Grace Group's right
to undertake such defense. If the Grace Group under-
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takes the defense of any Third Party Claim, it shall control the investigation
and defense thereof, except that the Grace Group shall not require any member of
the Buyer Group, without its prior written consent, to take or refrain from
taking any action in connection with such Third Party Claim, or make any public
statement, that it reasonably considers to be against its interest, nor shall
the Grace Group, without the prior written consent of Buyer, consent to any
settlement that (i) requires any member of the Buyer Group to make any payment
that is not fully indemnified under this Agreement or taken into account under
Sections 14.2A or 14.4; and (ii) does not include as an unconditional term
thereof the giving by the claimant or the plaintiff to the relevant member of
the Buyer Indemnified Group against whom such Third Party Claim is asserted, a
release from all liability in respect of such Third Party Claim or (iii)
provides for any nonmonetary damages which would materially adversely affect the
Dearborn Business; and subject to the Grace Group's control rights, the Buyer
Group may participate in such investigation and defense, at its own expense,
except as otherwise provided in Section 14.5(d) herein. If the Grace Group does
not undertake the defense of a tendered Third Party Claim, then except as
otherwise provided in Section 14.5(d), the Buyer Group shall control such
investigation and defense, except that the Buyer Group shall not require a
member of the Grace Group, without its prior written consent, to take or refrain
from taking any action in connection with such Third Party Claim, or make any
public statement, that such entity reasonably considers to be against its
interest, nor shall the Buyer Group, without the prior written consent of Grace,
consent to any settlement; and subject to the Buyer Group's control rights, the
Grace Group may participate in such investigation and defense, at its own
expense.
(c) Except as otherwise provided in Section 14.5(d), Buyer, or
any other member of the Buyer Group, may undertake the defense of a Third Party
Claim that the Grace Group has notified Buyer of, by notice to Grace not later
than 60 calendar days after receipt by Buyer of the Grace Group's notice of the
claim. Failure on the part of the Buyer Group to so notify Grace that it will
undertake such defense shall be deemed to be a waiver of the Buyer Group's right
to undertake such defense. If the Buyer Group undertakes the defense of any
Third Party Claim, it shall control such investigation and defense, except that
the Buyer Group shall not require any member of the Grace Group,
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without its prior written consent, to take or refrain from taking any action in
connection with such Third Party Claim, or make any public statement, that it
reasonably considers to be against its interest, nor shall the Buyer Group,
without the prior written consent of Grace, (i) consent to any settlement that
requires any member of the Grace Group to make any payment that is not fully
indemnified under this Agreement; (ii) does not include as an unconditional term
thereof the giving by the claimant or the plaintiff to the relevant member of
the Grace Indemnified Group against whom such Third Party Claim is asserted, a
release from all liability in respect of such Third Party Claim or (iii)
provides for any nonmonetary damages which materially adversely affect the
business conducted by the Grace Group other than the Dearborn Business and
subject to the Buyer Group's control rights, the Grace Group may participate in
such investigation and defense, at its own expense, except as otherwise provided
in Section 14.5(d). If the Buyer Group does not undertake the defense of a
tendered Third Party Claim, then except as otherwise provided in Section
14.5(d), the Grace Group shall control such investigation and defense, except
that the Grace Group shall not require a member of the Buyer Group, without its
prior written consent, to take or refrain from taking any action in connection
with such Third Party Claim, or make any public statement, that such entity
reasonably considers to be against its interest, nor shall the Grace Group,
without the prior written consent of Buyer, consent to any settlement; and
subject to the Grace Group's control rights, the Buyer Group may participate in
such investigation and defense, at its own expense.
(d) If a conflict of interest exists or is reasonably likely
to exist between the Grace Group and the Buyer Group with respect to a Third
Party Claim that would make it inappropriate in the judgment of the Claimant in
its reasonable discretion for the same counsel to represent both the Claimant
and the indemnifying party, then neither group shall be entitled to assume the
defense thereof. In such event the Buyer Group and the Grace Group shall each be
entitled to conduct its own investigation and defense, but the parties shall
cooperate to conduct such investigation and defense as efficiently as possible.
If a member of the Grace Group is required to indemnify the Buyer Group with
respect to such Third Party Claim, it shall pay the reasonable attorneys' fees
and expenses of one individual or firm representing the Buyer Group with respect
thereto.
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If a member of the Buyer Group is required to indemnify the Grace Group with
respect to such Third Party Claim, it shall pay the reasonable attorneys' fees
and expenses of the individual or firm representing the Grace Group with respect
thereto.
(e) The Buying Companies shall, and shall cause the other
members of the Buyer Group to, and the Selling Companies shall, and shall cause
the other members of the Grace Group to, make available to each other, their
counsel and other representatives, all information and documents reasonably
available to them that relate to any Third Party Claim, and otherwise cooperate
as may reasonably be required in connection with the investigation and defense
thereof.
14.6 No Consequential or Lost Profit Damages for Breaches of
Representations for Direct Claims. No party to this Agreement, nor any other
member of the Grace Group or the Buyer Group, shall seek or be entitled to
incidental, indirect or consequential damages or damages for lost profits in any
claim for indemnification in a Direct Claim based upon a breach of or inaccuracy
in the representations and warranties contained in Article 6 or Article 5,
respectively. Nothing set forth herein will otherwise limit either party to this
Agreement or any other member of the Grace Group or the Buyer Group from seeking
or being entitled to incidental, indirect or consequential damages or damages
for lost profits (i) in connection with any other breach of this Agreement or
(ii) if such damages are payable to a third party in connection with a Third
Party Claim.
14.7 No Duplication. In the event that any circumstance which results
in an adjustment to the Total Purchase Price, or would result in such an
adjustment but for the limitations of Section 4.A (c)(iii)(A) or (B), would also
constitute a breach of any representation or warranty by Grace under Article 5,
the Selling Companies shall have no obligation to indemnify the Buying Companies
with respect to such breach except pursuant to such adjustment.
14.8 Vacation Pay. Grace will indemnify Buyer in
accordance with the terms set forth on the Schedule to this
Section 14.8.
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ARTICLE 15
COOPERATION IN VARIOUS MATTERS
15.1 Mutual Cooperation. After the Closing, each party to this
Agreement shall, and shall cause its subsidiaries to, cooperate with each other
party and its subsidiaries as reasonably requested by such other party in
connection with the prosecution or defense of any claims or other matters
relating to the Dearborn Business. Such cooperation shall include furnishing
testimony and other evidence, permitting access to employees and providing
information regarding the whereabouts of former employees. The requesting party
shall reimburse the other party for any out-of-pocket expenses incurred by it in
connection with such request and owed to third parties.
15.2 Preservation of Buying Companies' Files and Records. Except for
books and records relating to Taxes which shall be addressed in the Tax
Procedures Agreement, following the Closing, the Buying Companies shall, and
shall cause the other members of the Buyer Group to, preserve all files and
records in their possession relating to the Dearborn Business prior to the
Closing, allow the Grace Group access to such files and records and the right to
make copies and extracts therefrom at any time during normal business hours, and
not dispose of any of such files or records that are less than ten years old,
except that at any time after the third anniversary of the Closing, any member
of the Buyer Group may give Grace written notice of its intention to dispose of
any files or records that are more than five years old, specifying the items to
be disposed of in reasonable detail. Any member of the Grace Group may, within a
period of sixty days after Grace's receipt of any such notice, notify Buyer of
the Grace Group's desire to retain one or more of the items to be disposed of.
Buyer shall, upon receipt of such a notice from a member of the Grace Group,
deliver to such member of the Grace Group, at Grace's expense, the items that
the Grace Group has elected to retain.
15.3 Preservation of Selling Companies' Files and Records. Except for
books and records relating to Taxes which shall be addressed in the Tax
Procedures Agreement, following the Closing, the Selling Companies shall, and
shall cause the other members of the Grace Group to, preserve all files and
records in their possession relating to the Dearborn Business prior to the
Closing, allow the Buyer
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Group access to such files and records and the right to make copies and extracts
therefrom at any time during normal business hours, and not dispose of any of
such files or records that are less than ten years old, except that at any time
after the third anniversary of the Closing, any member of the Grace Group may
give Buyer written notice of its intention to dispose of any files or records
that are more than five years old, specifying the items to be disposed of in
reasonable detail. Any member of the Buyer Group may, within a period of sixty
days after Buyer's receipt of any such notice, notify Grace of the Buyer Group's
desire to retain one or more of the items to be disposed of. Grace shall, upon
receipt of such a notice from a member of the Buyer Group, deliver to such
member of the Buyer Group, at Buyer's expense, the items that the Buyer Group
has elected to retain.
15.4 Publicity. Except as otherwise may be required by law, neither
party shall make an initial public statement (including, without limitation, any
press release) with respect to this Agreement and the other Transaction
Documents, and the transactions contemplated hereby and thereby, without the
prior written consent of the other party, which consent shall not be
unreasonably withheld or delayed. After the initial public statement, either
party shall have the right to make public statements regarding this transaction
without the consent of such other party.
ARTICLE 16
POST-CLOSING MATTERS
16.1 Reports. Other than information relating to Taxes which shall be
addressed in the Tax Procedures Agreement, the Buying Companies shall, and shall
cause the Transferred Companies (and to the extent the Buying Companies have the
right to do so, the Transferred Joint Ventures) and their respective employees
to, prepare on a timely basis, in accordance with the instructions of the Grace
Group, such financial and other reports and statements relating to the Dearborn
Business, the Transferred Companies or the Transferred Joint Ventures for
periods prior to the Closing as may be reasonably requested by Grace.
16.2 Renewal of Guaranteed Items. Without the prior
written consent of the Treasurer or any Assistant Treasurer
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of Grace, the Buying Companies shall not, and shall not permit the Transferred
Companies (or, to the extent the Buying Companies have the right to do so, the
Transferred Joint Ventures) or any other member of the Buyer Group to, renew or
extend the term of, increase its obligations under, or transfer to a third
party, any lease, loan, contract or other obligation for which Grace or any
other member of the Grace Group is or may be liable, as guarantor, original
tenant, primary obligor, or otherwise, unless all obligations of the Grace Group
with respect thereto are thereupon terminated by documentation satisfactory in
form and substance to Grace.
16.3 Payment and Discharge of Certain Intercompany
Liabilities.
(a) Surviving Intercompany Accounts that are not between units
of the Dearborn Business shall be paid in cash, regardless of whether prior to
the Closing such items would have been settled by cash payment or by other
means, at the earlier of (i) 30 calendar days after receipt of an invoice
therefor or (ii) the time payment is made pursuant to Section 4.7, other than
the account receivable from the Dearborn Japan J.V. by Grace Japan KK which
shall remain in effect pursuant to its terms. Except for Surviving Intercompany
Accounts and as otherwise specifically provided in the Ancillary Agreements, any
amounts owed by any member of the Grace Group to any Transferred Company or
Transferred Joint Venture, or by any Transferred Company or Transferred Joint
Venture to any other member of the Grace Group shall be deemed paid and
discharged, effective upon the occurrence of the Closing.
(b) All checks written by Dearborn U.S. in the ordinary course
of business prior to the Closing will be honored by Grace and all obligations of
Dearborn U.S. to reimburse Grace for such checks shall be deemed paid and
discharged, effective as of the Closing. All funds in the depository accounts of
Dearborn U.S. on the Closing Date shall be the property of Grace, except for a
disbursement account and an imprest payroll account, each of which shall have a
balance of US $1,000.00 at the Closing and signatories designated by Buyer U.S.
(c) At Grace's request at any time and from time
to time after the Closing, Buyer shall cause Dearborn U.S.
to promptly reimburse Grace for any amounts paid directly
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by the Grace Group after the Closing to third parties on account of expenses
incurred prior to the Closing that relate directly and exclusively to the
Dearborn Business.
16.4 Use of "Grace" Name. Within 90 days after the Closing, (a) Grace
Dearborn, N.V., Dearborn Canada, Dearborn France, Dearborn Netherlands and
Dearborn Sweden shall each change its corporate name to a name that does not
include the name "Grace" and initiate any necessary legal filings with the
appropriate Governmental Authority to effectuate a name change and (b) the
Transferred Companies, Transferred Joint Ventures and Buying Companies shall
have no right to use the "Grace" name, except that for a period ending on the
later to occur of (i) six months after the Closing or (ii) November 30, 1996,
the Transferred Companies, Transferred Joint Ventures and Buying Companies shall
have the right to use any catalogues, sales and promotional materials and
printed forms that use such name and are included in the Total Dearborn Assets
or the assets of any Transferred Company or Transferred Joint Venture as of the
Closing, or that have been ordered prior to the Closing for use in the Dearborn
Business, but only to the extent that it is not practicable to remove or cover
up the "Grace" name; provided, however, Buyer shall move as expeditiously as
possible to cancel registrations with the appropriate Governmental Authorities
to effectuate such name change. The Buying Companies shall use reasonable
efforts to minimize such usage and to discontinue it as soon as practicable
after the Closing.
16.5 Intercompany Agreements. Except for the Intellectual Property
License and Assignment Agreement between Grace and Dearborn U.S. dated as of
November 30, 1995, the agreements between Grace and other members of the Grace
Group that have been assigned to Dearborn U.S. thereunder, the other agreements
entered into between members of the Grace Group and Dearborn U.S. in connection
with the transfer to Dearborn U.S. of the Dearborn Business in the United States
and the Ancillary Agreements, (a) all contracts, licenses, agreements,
commitments or other arrangements between Grace or any other member of the Grace
Group and any Transferred Company, Transferred Joint Venture or the Dearborn
Business unit of any Selling Company, whether written or oral, and whether
express or implied, pursuant to which Grace (or any other member of the Grace
Group) provides management, administrative, legal, financial, accounting, data
processing, insurance, technical support, or
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other services to the Dearborn Business or such Transferred Company or
Transferred Joint Venture, or the use of any assets of any member of the Grace
Group, or pursuant to which rights, privileges or benefits are accorded to the
Dearborn Business or any Transferred Company or Transferred Joint Venture as a
unit of the Grace Group, shall terminate as of the Closing, and (b) after the
Closing, the Buying Companies, the Transferred Companies and the Transferred
Joint Ventures shall have no rights under any similar contract, license,
agreement, commitment or arrangement with Grace (or any other member of the
Grace Group).
16.6 Parent Guaranty. As soon as possible after the NMC Divestment (as
defined herein), Grace shall obtain and deliver a guaranty from WRG-DE (as
defined herein) of the full payment and performance of the obligations of Grace
under this Agreement and the Transaction Documents, which guaranty shall be in
form and substance reasonably satisfactory to Buyer. Upon receipt of such
guaranty, the guaranty of WRG contained in this Agreement shall be of no further
force and effect. For purposes of this Agreement, (i) "NMC Divestment" shall
mean a transaction of which the primary purpose is Grace's divestment of its
Subsidiary, National Medical Care, Inc., or to cause Grace and National Medical
Care, Inc. to no longer be under common control; and (ii) "WRG-DE" shall mean
Grace Holdings, Inc., a Delaware corporation, or any other public company owning
all of the capital stock of Grace following the NMC Divestment.
ARTICLE 17
EXPENSES
17.1 Buyers' Expenses. Whether or not the transactions contemplated
hereby are consummated, Buyer shall (i) pay and indemnify the Selling Companies
against all expenses incurred by or on behalf of the Buying Companies in
connection with the preparation, authorization, execution and performance of
this Agreement and the transactions contemplated hereby, including, but not
limited to, the fees and expenses of J.P. Morgan & Co. and all fees and expenses
of brokers, finders, agents, representatives, counsel and accountants and (ii)
pay one-half of: all recording and filing fees and other costs and expenses
(other than Taxes which shall be paid in accordance with procedures set forth in
the Tax Procedures Agreement) incurred in connection with the filing with a
Governmental Authority (either domestic or foreign) pursuant to Section
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8.2 hereof or otherwise, including, without limitation, notarial filings and
similar fees applicable to the transfer to the Buying Companies of the Total
Dearborn Assets, the Transferred Shares or the Transferred Interests pursuant to
this Agreement.
17.2 Sellers' Expenses. Whether or not the transactions contemplated
hereby are consummated, Grace shall (i) pay and indemnify the Buying Companies
against all expenses incurred by or on behalf of the Selling Companies in
connection with the preparation, authorization, execution and performance of
this Agreement and the transactions contemplated hereby, including, but not
limited to, the fees and expenses of Merrill Lynch Pierce Fenner & Smith
Incorporated and all fees and expenses of brokers, finders, agents,
representatives, counsel and accountants and (iii) pay one-half of: all
recording and filing fees and other costs and expenses (other than Taxes which
shall be paid in accordance with procedures set forth in the Tax Procedures
Agreement) incurred in connection with the filing with a Governmental Authority
(either domestic or foreign) pursuant to Section 8.2 hereof or otherwise,
including, without limitation, notarial filings and similar fees applicable to
the transfer to the Buying Companies of the Total Dearborn Assets, the
Transferred Shares or the Transferred Interests pursuant to this Agreement.
ARTICLE 18
NOTICES
18.1 Notices. All notices, requests, demands and other communications
required or permitted to be given under this Agreement shall be deemed to have
been duly given if in writing and delivered personally, by reputable overnight
courier service or by telephone facsimile transmission (as evidenced by a
confirmed receipt), addressed as follows:
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If to any of the Selling Companies or, prior to the Closing, any of the
Transferred Companies or Transferred Joint Ventures:
c/o W. R. Grace & Co.-Conn.
One Town Center Road
Boca Raton, Florida 33486-1010
Attention: Larry Ellberger
Fax: (407) 362-2153
with a copy to:
W. R. Grace & Co.-Conn.
One Town Center Road
Boca Raton, Florida 33486-1010
Attention: Secretary
Fax: (407) 362-1635
If to any of the Buying Companies or, after the Closing, any of the
Transferred Companies or Transferred Joint Ventures:
c/o Betz Laboratories, Inc.
4636 Somerton Road
Trevose, Pennsylvania 19053
Attention: Larry B. Rankin
Fax: (215) 953-2484
with a copy to:
Betz Laboratories, Inc.
4636 Somerton Road
Trevose, Pennsylvania 19053
Attention: General Counsel
Fax: (215) 953-5536
Any Selling Company or, prior to the Closing, any Transferred Company or
Transferred Joint Venture may change the address to which such communications
are to be directed to it by giving written notice to Buyer in the manner
provided above. Any Buying Company or, after the Closing, any Transferred
Company or Transferred Joint Venture may change the address to which such
communications are to be directed to it by giving written notice to Grace in the
manner provided above.
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ARTICLE 19
GENERAL
19.1 Entire Agreement. This Agreement, including the Schedules hereto,
and the other Transaction Documents set forth the entire agreement and
understanding of the parties and related persons with respect to the subject
matter hereof and supersede all prior agreements, arrangements and
understandings relating thereto, except for the Confidentiality Agreement.
19.2 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of New York, excluding (a) any conflict-of-laws
provisions thereof that would otherwise require the application of the law of
any other jurisdiction, and (b) if applicable, the United Nations Convention on
Contracts for the International Sale of Goods.
19.3 Submission to Jurisdiction. Each Buying Company and Selling
Company hereby irrevocably submits in any suit, action or proceeding arising out
of or relating to this Agreement or any of the other Transaction Documents to
which it is or will be a party, or any of its obligations hereunder or
thereunder, to the jurisdiction of the United States District Court for the
Southern District of New York and the jurisdiction of any court of general
jurisdiction of the State of New York located in New York County, and waives any
and all objections to such jurisdiction that it may have under the laws of the
State of New York or any other jurisdiction, except to the extent that this
Agreement or any other Transaction Document specifically provides that a
particular dispute is to be referred to a court in another jurisdiction or to
resolution by arbitration or experts.
19.4 Governing Language. This Agreement in the Eng-
lish language shall be the definitive and controlling text,
notwithstanding any translation into another language.
19.5 Successors; No Third-Party Beneficiaries. This Agreement shall not
be assignable by either party hereto except with the prior written consent of
the other; provided, however, that the Buying Companies may transfer or assign,
in whole or from time to time in part, to one or more of their Subsidiaries, the
right to purchase all or a portion of the Total Dearborn Assets, Transferred
Shares,
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Transferred Interests and the Transferred Investment, but no such transfer or
assignment shall relieve Buyer of its obligations hereunder. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Nothing in this Agreement,
expressed or implied, is intended to confer upon any Person (including any
employee or former employee) other than the Buying Companies, the Selling
Companies or their successors and permitted assigns, any rights or remedies
under or by reason of this Agreement. Further, no provision of this Agreement
shall create any such rights in any such Persons in respect to any benefits that
may be provided, directly or indirectly, under any employee compensation and
benefit plans, programs, policies and arrangements (to include fringe benefits)
or any plan or arrangement which may be established by Buyer or any of its
affiliates.
19.6 Amendments and Waivers. This Agreement may be amended, superseded
or terminated, and any of the terms hereof may be waived, only by a written
instrument specifically referring to this Agreement and specifically stating
that it amends, supersedes or terminates this Agreement or waives any of its
terms, executed by all parties, or in the case of a waiver, by the party waiving
compliance. Failure of any party to insist upon strict compliance with any of
the terms of this Agreement in one or more instances shall not be deemed to be a
waiver of its rights to insist upon such compliance in the future, or upon
compliance with other terms hereof.
19.7 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be an origi-
nal, but all of which shall constitute but one agreement.
19.8 Captions. The captions used in this Agreement
are for convenience of reference only and shall not be
considered in the interpretation of the provisions hereof.
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IN WITNESS WHEREOF, the parties have executed this instrument on the
date first above written.
W. R. GRACE & CO.-CONN. BETZ LABORATORIES, INC.
By: /s/ Larry Ellberger By: /s/ Larry V. Rankin
Name: Larry Ellberger Name: Larry V. Rankin
Title: Senior Vice President Title: Senior Vice President
W. R. Grace & Co., a New York corporation ("WRG"), hereby
unilaterally and unconditionally guarantees the full payment and
performance of all obligations of W. R. Grace & Co.-Conn., a
Connecticut corporation and a wholly owned subsidiary of WRG,
under this Agreement and the Transaction Documents.
W. R. GRACE & CO.
By: /s/ Larry Ellberger
Name: Larry Ellberger
Title: Senior Vice President
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